"■■■• ' . " ■■.■.;■■' • ; ' ■.-."■ ■■'..'; . . ■ " , ' ...... . , ■ ' * ■:■•'■ ■ ,-;y ■ . - ■■■'■■' ■ r .' ■'••-.•■ , Jfcui $ark Hate College of Agriculture 3U Olorncll IntuerBttB Hthranj Date Due fab23. 56S DFr^t « **Ci,g ? '« D ?2 * J® - Library Bureau Cat. No. 1137 Cornell University Library HB 161.B8 American political economy; including str 3 1924 013 685 288 The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013685288 y^TK.. '^-mj' , AMERICAN POLITICAL ECONOMY; INCLTTDINQ STKICTUBES ON THE MANAGEMENT OF THE CURRENCY AND THE FINANCES SINCE 1861 WITH A CHAR! SHOWING THE FLUCTUATIONS IN THE PRICE OF GOLD. BT FRANCIS BOWEN, AUORD PROFESSOR OF NATURAL RELIGION, MORAL PHILOSOPHY, AND CIVIL POLITY IN HARVARD COLLEGE. NEW YORK: SCRIBNER, ARMSTRONG, AND CO., 1874. Entered according to Act of Congress, In the year 1870, by CHARLES SCEIBNER & CO., In the Clerk's Office of the District Court for the Southern District of New York. RIVERSIDE, CAMBRIDGE! PRINTED BY H. O. HOUGHTON AND COMPANY. PREFACE. During the last eight years, the United States have been trying experiments in the management of the Currency, in Banking, Finance, and Taxation, on a larger scale than the world had ever witnessed. The trial has cost the country much ; we have not yet recovered from its consequences, and probably it will yet be long before we shall cease to feel them. But the experience thus gained has been valuable for the in- terests both of science and of practical legislation. It has thrown much light on the theories of Currency and Finance, which are the most interesting, because the most practically important, portions of the science of Political Economy. It has demonstrated by the logic of facts some of the main doc- trines in these theories, disclosed some important qualifications of maxims formerly received, and raised questions of broad scope for further inquiry. I have here endeavored to bring together the results of these experiments, and to read the lessons which they teach. The book is to be regarded more as a new work, than as a new edition of the volume which I published, fourteen years ago, under the title of " Principles of Political Economy." Several chapters have been added, others suppressed or rewritten, and the remainder much con- densed and modified. The title under which the book now appears may seem to require defence or explanation. I hold, with Mr. Samuel Laing, that "every country has a Political Economy of its own, suitable to its own physical circumstances of position on the globe," and to the character, habits, and institutions of its people. Unquestionably there is a universal science of XV PEEFACB. Political Economy, applicable not only to America, but to France, England, and Germany, — to all nations under tbe sun. There must be such a science, for the habits and dispo- sitions of men, as manifested in the pursuit of wealth, may be reduced to general principles, and thus become subjects of legitimate scientific classification aud inquiry, just as much as those other habits and dispositions which appear in the constitution and history of organized society, and which, when generalised and classified, become the science of Politics. There is a general science of Human Nature, of which the spe- cial sciences of Ethics, Psychology, Politics, and Political Econ- omy are so many distinct and co-ordinate departments. It is the science as taken in this broad sense which such writers as Eicardo, Malthus, McCulloch, and J. S. Mill have endeav- ored to develop and to teach ; though, as it seems to me, with very limited success. They have even assumed to treat it deductively, deriving its principles from their knowledge of human nature, and tracing these down to the outward con- duct of men and to the social phenomena which these general motives produce or influence. But it must be admitted, I think, that these universal principles are comparatively few and unimportant, and if the science were limited to them, it would be of narrow compass and limited utility. It can be fully and profitably set forth only in the inductive method, by observing and analyzing the phenomena in a particular case, and tracing these up to their sources, the circumstances of the people and the principles of human nature in which they originated. Because Adam Smith, in the main, adopted this method, his great work is a mine of information respecting the economical condition of Great Britain in the middle of the last century, and the institutions and laws by which this condition was affected. Even the writings of Eicardo, J. S. Mill, and their followers, though professing to treat the subject deductively and in the abstract, so that their conclusions shall be universally applicable, are pervaded with a tacit reference to the pireum- stances and institutions of the particular people fr>r whom PREFACE. V they wrote. The system which they have expounded is really the Political Economy of England alone, and is even more characteristic and peculiar than her social organization and civil polity. Here in America, as it seems to me, we need an American Political Economy, the principles of the science being adapted to what is special in our physical con- dition, social institutions, and industrial pursuits. The facts need to be fully presented, before they can be analyzed and referred to their scientific principles. Political Economy is eminently a practical science, and a treatise on it may profitably include much valuable informa- tion respecting the habits of business, the course of domestic and foreign trade, and the methods which have been sug- gested by experience for applying Labor and Capital to the best advantage. I have endeavored to incorporate into this work such particulars respecting the operations of banking, the disposal of the public lands, the office of bills of exchange, the functions of the currency, the supply of the precious metals, the various modes of taxation, and the financial his- tory of this country for the last ten years, as might be useful, not only to young men in College, but to those who are about to enter the mercantile profession. Cambbidge, February 2i, 1870. CONTENTS. CHAPTER I. Wealth and its Transmutations : the Aims, the Limitations, and the Advantages of the Study op Political Economy: she Laissez-faire or Let-alone Principle .... 1 CHAPTER II. How "Wealth is created, and what constitutes Exchangeable Value: the Measure of Value: how Wealth is distributed among its Producers 22 CHAPTER III. The Division of Labor: its beneficial and injurious Conse- quences: Effects of the Introduction of Machinery . . 45 CHAPTER IV. The Nature of Capital and the Means of its Increase: Cir- cumstances which favor the Growth of Capital: the Secu- rity of Property 55 CHAPTER V. The Increase of Capital as affected by the Encouragement of Manufactures, and by the Concentration of the People in Cities and Towns 71 Viii CONTENTS. CHAPTER VI. The Increase of Capital as affected by the Advantages held out to the Possessors of Wealth : Injurious Effects of Caste, or the Fixity of Ranks and Classes 90 CHAPTER VII. Strife between Laborers and Capitalists : Strikes and Trade- Unions: Means of improving the Condition of the Laboring Classes 110 CHAPTER VIII. The Malthusian Theory of Population considered and refuted : the true Law of the Increase of Population . . . 125 CHAPTER IX. The Theory of Rent 150 CHAPTER X. Causes which affect the Rate of Wages: why Wages are not equal in different employments 173 CHAPTER XI. Causes which affect the Rate of Profits : Limited Extent of the Field for the Use of Capital : Theory of Gluts . . 204 CHAPTER XII. The Theory and Uses of Money, as illustrated by Incidents in the War of the Great Rebellion .... 237 -CHAPTER XIII. The Distribution of the Precious Metals throughout the World: Substitutes for Money and Means of economizing its Use: Bills of Exchange: Decline in the Value of Monet 273 CONTENTS. IX CHAPTER XIV. The Functions of Banes and the Nature of Bank-Notes: the Operations of Credit 311 CHAPTER XV. Paper Monet and its Use as Currency during a Revolution or Civil War: History of the Emission of such Money in the War of the Rebellion 335 CHAPTER XVI. The National Banking System 367 CHAPTER XVII. National Debt: Various Methods of Funding .... 393 CHAPTER XVIII. Taxation 426 CHAPTER XIX. Effects of Speculation upon Prices: the Phenomena of a Com- mercial Crisis 460 CHAPTER XX. The Doctrine of International Exchanges: the Loots of Free Trade and the Protective System 480 POLITICAL ECONOMY. CHAPTER I. TTEALTH AND ITS TRANSMUTATIONS : THE AIMS, THE LIMITATIONS, AND THE ADVANTAGES OP POLITICAL ECONOMY : THE LAISSEZ- FAIRE, OR LET-ALONE PRINCIPLE. The most obvious, though certainly not the most important, difference between a civilized community and a nation of savages consists in the vastly greater abundance, possessed by the former, of all the means of comfort and enjoyment. These means, includ- ing the necessaries, conveniences, and luxuries of life, are chiefly material objects, — such as manufactured goods, articles of food and clothing, ships and buildings, the useful and the precious metals, tools and machines, and ornaments, or things designed to gratify the taste and the senses. Some, however, are immaterial, and yet are just as much objects of desire, just as much objects of barter and sale, as cloth and bread. The legal knowledge and acumen of a lawyer, for instance, the vocal powers of a remarkable singer, the mimetic talent of an actor, all command a price in the market quite as readily as any goods in a shop. When an occasion arises, we buy the services of a. lawyer or a physician, just as we buy a ticket to a concert, or an instrument of music for a drawing- room.* * Many Political Economists exclude immaterial products from their definition of ■wealth, because the labor which is devoted to such products " ends in immediate enjoyment, without any increase of the accumulated stock of permanent means of enjoyment." " When a tailor makes a coat and sells it," argues Mr. J. S. Mill, " there is a transfer of the price from the customer to the tailor, and a coat besides, which did not previously exist; but what is gained by an actor is a mere transfer from the spectator's funds to his, leaving no article of wealth for the spectator's in- 2 WEALTH AND ITS TKANSMUTATIONS. Now, the aggregate of all these things, whether material or imma- terial, which contribute to comfort and enjoyment, which cannot be ob- tained or produced without more or less labor, and which are objects of frequent barter and sale, is what we usually call Wealth; and individuals or nations are denominated rich or poor, according to the abundance or scarcity of these articles which thev possess, or have at their immediate disposal. Two questions may be asked respecting the production of these articles: — 1. By what mechanical processes are they manufac- tured or obtained 1 To answer this query is the business of a man of practical science or an artisan, — of a chemist, a mechanic, or a farmer ; as Political Economists, we have nothing to do with it. But (2.) we may ask, On wliat principles do men readily ex- change these articles for each other ; and what motives, what general laws, regulate their production, distribution, and consumption ? Po- litical Economy undertakes to answer this question, and is there- fore properly considered as one of the Moral Sciences. It depends, quite as much as Politics and Ethics, upon the principles of the human mind. It is quite as possible to reduce to general laws the habits and dispositions of men, so far as they are manifested in their efforts for the acquisition of wealth, as it is to develop, from observation and consciousness, the laws of our moral constitution. Political Economy begins with the supposition that man is dis- posed to accumulate wealth beyond what is necessary for the im- mediate gratification of his wants, and that this disposition, in the great majority of cases, is, in fact, unbounded ; that man's incli- nation to labor is mainly controlled by this desire ; that he is con- stantly competing with his fellows in this attempt to gain wealth ; and that he is sagacious enough to see what branches of industry are most profitable, and eager enough to engage in them, so that demnification." Wo reply, that the purchaser obtains only a gratification of desire in either case. From the coat, he has moderate enjoyment prolonged for some months ; but he might do without it, and work in his shirt-sleeves. From the theatre, he has keen enjoyment, that lasts only a few hours ; and he may prefer such pleasure to the luxury of additional clothing. It is inconsistent to give the name of wealth to what pleases our palates for a moment, and deny it to what gives keener pleasure to our ears. The characteristic of all wealth is, directly or indirectly, to satisfy some want, or gratify some desire. Food which is ready to be eaten is wealth, just as much as the knives and forks with which we eat it ; though the former is devoured at once, and there is an end of it, while the latter may remain in daily use for ycari. WEALTH AND ITS* TRANSMUTATIONS. 3 competition regularly tends to bring wages, profits, and prices to a level. The science, then, is more closely allied with the Philoso- phy of Mind than with Natural History, or the Physical Sciences. It has been called Catallactics, or "the Science of Exchanges"; and, agreeably to this notion, man himself has been defined to be an animal that makes exchanges ; "as no other, even of those animals which, in other points, make the nearest approach to ra- tionality, has, to all appearance, the least notion of bartering, or in any way exchanging one object for another." With regard to the articles that constitute wealth, we observe that far the larger portion of them are perishable, or quickly con- sumable. Some of them, like the immaterial products, are con- sumed at the instant that they are produced ; others, like articles of food, last a little longer, but perish if not quickly used. The fashion and the fabric of manufactured goods soon decay and pass away, the former being often more short-lived than the latter. Tools and machinery wear out ; houses and other buildings need constant repair, and, at stated intervals, must be wholly renewed. Hardly anything but the solid land itself — the great God-given, food-producing machine — is permanent ; and the exchangeable value even of the land (the only quality of it which we have to consider in this science) quickly diminishes, and almost wholly disappears, if it be not kept up by the constant application of labor and capital, or by the continued prosperity of the community who live upon it. The best-situated land in a populous city may be worth $ 60 or $ 70 a square foot ; but if the other articles •which constitute the wealth of that city ■ — the ships in her harbor and the goods in her shops — were not perpetually renewed, the land would deteriorate in value with great rapidity ; and if the city should become, in respect to population and business, a small and decaying village, the land might not be worth $ 40 an acre. Wealth, then, must be perpetually renewed, or it quickly disap- pears. The stock of national wealth is like the flesh, blood, and bones of a man's body, which are in a state of constant flux and renovation. Physiologists tell us that our bodies are entirely re- newed about once in seven years ; but the riches of an opulent community are not so long-lived even as this. Let labor universal- ly cease, let every man, woman, and child rest with folded arms, or do nothing but eat, drink, and be merry, — and those riches would 4 ~ WEALTH AND ITS TRANSMUTATIONS. melt and waste like snow under a July sun. National wealth, then, may be more fitly compared to a given portion or section of the waters of a running stream. The water is always chang- ing, yet, in one sense, is always the same, so long as the supply from above is maintained ; but if the springs in the upper country should be dried up, the efflux below would soon drain the channel. And here is one proof, among a thousand others, of the folly and ignorance of those who cry out against the institution of property, and call for an equal distribution of all the wealth of a community among all its members. " Riches have wings " in a far more im- mediate and practical sense than these people are aware of. They always talk as if the national wealth was a fixed and imperishable quantity, like the land, the sunlight, and the air ; and as if, unlike these, it was monopolized by a few, though really sufficient for the wants of all. Their blunder is as great as would be that of an ignorant rustic, who, after visiting the market of a populous city on the Mondays of two successive weeks, and observing that the stalls presented almost precisely the same array of meats and vegetables, in the same order, should conclude that there had been no change, and that, as here was a permanent stock of food enough for all, while some families in the city were suffering from hunger, a general and equal distribution of this stock, without compensa- tion to the owners, should be ordered, under the idea that it would make any future want of provision impossible. The possibility that this great store might all be consumed in one day ; that the dealers, deterred by this spoliation, might not supply the market at all on the next day ; and that many indigent families, suddenly finding all their wants supplied without any effort on their part, would give up labor altogether, — would never occur to him. " This perpetual consumption and reproduction of capital," says Mr. J. S. Mill, il affords the explanation of what has so often excited wonder, — the great rapidity with which countries re- cover from a state of devastation ; the disappearance, in a short time, of all traces of the mischiefs done by earthquakes, floods, hurricanes, and the ravages of war. An enemy lays waste a country by fire and sword, and destroys or carries away nearly all the movable wealth existing in it ; all the inhabitants are ruined, and yet, in a few years after, everything is much as it was before. This vis medicatrix natures has been a subject of sterile astonish- WEALTH AND ITS TRANSMUTATIONS. 5 ment, or has been cited to exemplify the wonderful strength of the principle of saving, which can repair such enormous losses in so brief an interval. There is nothing at all wonderful in the mat- ter. What the enemy have destroyed would have been destroyed, in a little time, by the inhabitants themselves ; the wealth which they so rapidly reproduce would have needed to be reproduced, and would have been reproduced, in any case, and probably in as short an interval. Nothing is changed, except that, during the reproduction, they have not now the advantage of consuming what had been produced previously. The possibility of a rapid repair of their disasters mainly depends on whether the country has been depopulated. If its effective population have not been extirpated at the time, and are not starved afterwards, [and if their exertions are not paralyzed by the dread of a similar quickly recurring calamity,] then, with the same skill and knowledge which they had before, with their land and its permanent improvements unde- stroyed, and the more durable buildings probably unimpaired, or only partially injured, they have nearly all the requisites for their former amount of production. If there is as much of food left to them, or of valuables to buy food, as enables them, by any amount of privation, to remain alive and in working condition, they will, in a short time, have raised as great a produce, and acquired collec- tively as great wealth and as great a capital, as before, by the mere continuance of that ordinary amount of exertion which they are accustomed to employ in their occupations. Nor does this evince any strength in the principle of saving, in the popular sense of the term ; since what takes place is not intentional abstinence, but involuntary privation." This pregnant truth, that the whole stock of national wealth is in a constant and rapid process of consumption and reproduction, is generally lost sight of, because we see that the fortunes of in- dividuals, the aggregate of which constitutes the national stock, are comparatively permanent, and, as it seems, do not need to be perpetually renewed. If once raised considerably above a mere competence, and then "invested," as the phrase goes, with ordinary care and judgment, a man's property' will continue apparently without change, all the while yielding its regular income or in- crease. How can this fact be reconciled with the principles that have just been stated respecting the nature of all wealth ] The 6 WEALTH AND ITS TRANSMUTATIONS. answer to this question brings us at once to the heart of the sub- ject. , It is the property, the ownership, that is unchanged, and thus the fortunes of individuals remain intact ; the articles which are the subjects of that property,— which are owned, — and -which, at any one time, constitute the wealth, are constantly changing ; they are used up, and then renewed, without the owner's co-operation, and often even without his knowledge. Barring casualties, un- lucky investments, and the like, (which, being comparatively few and infrequent, maybe left out of the account,) no man's property is consumed without being replaced by the very act of consump- tion, unless he himself, consciously and wilfully, consumes or ex- pends it unproductively ; — that is, upon the gratification of his own tastes and appetites, without looking for a return or replace- ment. To "invest" one's savings is to lend them. Not having time, inclination, or perhaps ability, to use them reproductively to advantage, — that is, to superintend the constant changes of form which they must undergo, or quickly perish, — we lend them to others, who can and will direct their transformations, on condition of receiving a small portion of the profits of these changes. For it is also the nature of wealth, when well managed, to grow, or in- crease, by each change of form. To make this clearer, we will analyze a single instance, — the simplest one that can be found. If the earnings of an artisan for a year have amounted to $ 300, he may expend them all upon food, clothing, and amusement. In this case, he spends them all unproductively, — that is, without expecting a return or replace- ment of them. At the year's end, all the advantage which re- maim to him from his year's labor is, that his strength, health, and spirits are renewed or replaced, so that he can now go to work and earn another year's wages. But suppose that he is frugal, and ambitious to grow rich. He will then contract his daily expenses, drink nothing but water, give up all amusements, and thus, at the end of the year, he will find that his health and spirits are even greater than before, and that he has saved perhaps $ 100, or one third of his earnings. What will he do with this $100'! In a rude state of society, among a half-civilized people, or under the government of a Turk- ish pacha, property being insecure, he would probably obtain it in WEALTH AND ITS TRANSMUTATIONS. 7 the form of gold or silver coin, and bury it in the corner of his cellar or garden. There, sure enough, it would remain without change, and therefore without income or increase. But in this country, in England, or France, lie would probably put it in the Savings' Bank ; that is, he would lend it to the bank, which, for shortness, we will suppose to be a bank both of savings and dis- count. In consequence of this loan, the bank will be able to lend or discount $ 100 more to one of its customers. Suppose a baker wishes to extend his business, but has not capital enough of his own to buy more flour with. He borrows this $ 100 of the bank for four months, and with it he immediately purchases twenty bar- rels of flour more than he could otherwise have purchased. What he borrows of the bank is not, in fact, the $ 100 bill which is handed to him across the counter, but the twenty barrels of flour which he buys with it ; the bank-bill being only a ticket or certifi- cate, in which the bank directors say to the flour-dealer, " Deliver this man twenty barrels of flour, and we will pay you for it." The flour-dealer complies, and immediately carries back the bill to the bank, and is paid for it either in hard specie, or in that amount earned to his credit, or in any other form that he may prefer. We may put aside, then, in future, any consideration of the bank-bills ; for they are nothing but tickets of transfer, or orders from the bank to any merchant, asking him to deliver the bearer a certain amount of goods, and the bank will pay him for them. But let us follow the laborer's $ 100 of savings. In what form do they now exist ? Evidently they have become twenty barrels of flour, which the baker gradually transforms into many loaves of bread, and sells them to his customers. Before the four months expire, the bread is all sold and eaten ; so that the $ 100 are now fairly consumed. But has their value disappeared 1 By no means. The baker's customers have paid him for this bread at least $ 120, so that he can now repay the bank the $ 100 that he borrowed, — with the addition of two dollars for four months' interest, — and put eighteen dollars into his own pocket as the reward of his labor. The bank, being again in funds, can now lend, we will suppose, $ 102 worth of leather, for four months, to an enterprising cord- wainer, who begins immediately to manufacture it into boots and shoes. Before his four months have expired, these are all sold, (half of them, perhaps, are half worn out,) and he has received, 8 WEALTH AND ITS TRANSMUTATIONS. it may be, $ 225 for them ; so that he can now repay the bank its loan of $ 102, besides two dollars and a fraction for interest, pay his workmen probably $ 100, for a good deal of labor was needed for the consumption of that amount of leather, and put a little more than twenty dollars into his own pocket. At the end of eight months, then, the bank has a little over $ 104 to let out for another period of four months. A paper-maker borrows this, buys rags with it, makes paper out of them, sells it, and with the proceeds Tie pays the bank $ 106 and a fraction. The year has now expired, and our frugal laborer, having occa- sion to make a different use of his savings, goes to the bank for them, and receives $ 101.50, the bank retaining nearly two dollars as compensation for its agency in the affair. Thus the laborer finds that, by some process incomprehensible to him, the $ 100 which he deposited in the bank for a year has hatched $ 4.50, which it certainly would not have done if it had been simply locked up in the vault for safe-keeping. Could he have followed that process, he would have seen his $ 1 00 successively becoming, or assuming the shape of, flour, bread, leather, shoes, rags, and paper ; and in each of these forms, in turn, he would have seen it entirely consumed or used up. The flour, leather, and rags have been manufactured into corresponding articles, the bread has been eaten, the shoes are half worn out, and the paper is covered with writing and printing, so that a new supply of each is called for. There has been a net gain at each stage of the transaction, and-the total gain has been fairly distributed among all the parties to it, compensating each for his labor or frugality. If any one thinks the instanoe here analyzed is a trivial or ex- ceptional one, so that it throws little light on the general theory of wealth, let him look at the returns made to the Legislature by all the Savings' Banks in Massachusetts in 1862, which show that the amount deposited in those institutions exceeded $ 50,400,000 ; that it yielded an annual average dividend of over six per cent ; and that the number of depositors was 248,900, so that the average amount to the credit of each depositor was a fraction over $ 202. This aggregate of savings — made up, be it remembered, by the labor and frugality of Irish domestics, small mechanics, day-labor- ers in the country, and the like — is more than enough to build and keep in motion all the cotton and woollen factories in Massa- WEALTH AND ITS TKANSMUTATIONS. 9 chusetts ; as the aggregate capital of all these establishments in that State, in 1865, fell short of forty-nine millions. Observe, also, that large sums are annually withdrawn from these institutions, for pro- ductive investment in other ways, and the deficit thus made, is immediately supplied by fresh deposits ; so that these Savings' Banks resemble great lakes, in which the water ever remains at the' same level, though they are constantly supplying running streams, which bear a fertilizing influence with them all their way towards the ocean. We now go back to the principle first enunciated, and which seems to be firmly established, — that the whole wealth of a civ- ilized nation is in a state of constant flux and renovation, the ap- parent stability and unchangeableness of the fortunes of individuals offering no exception to this principle. The instance analyzed also proves that a profit, an addition to the national stock, is made only at and by these successive changes of form. What is incon- sumable is also necessarily unproductive. We consume in order that we may produce, and we must consume before we can produce. The wealth which is literally locked up or buried only rots or rusts ; and we might just as well bury only stones or sand in its place. But money or wealth is not locked up when placed in banks, institutions for savings, — moneyed corporations, as they are called, — and the like. These institutions are nothing but contrivances for collecting it, setting it in motion, and making it circulate around us, like the atmosphere which we breathe. The wealth which would otherwise be scattered in many little hoards, remaining idle because owned by those whose circumstances would not allow them to use it to advantage, or because the separate sums were toq small to admit of a profitable application, is, by these means, brought together and made as efficient as the vast accumulations of great capitalists. The aggregate thus formed is made to do its full part in supplying the lungs of industry, keeping it alive and active, and making all the parts of the body politic and social contribute to the sustenance and growth of the whole. The fifty millions in the Savings' Banks, and the sixty-seven millions of capital in the banks of deposit and circulation, (I speak only of Massachusetts,) do not rest there, but are, at this moment, circulating around us, — driv- ing the wheels of our factories, supplying our mechanics with tools and our tradesmen with goods, building and freighting our ships, 10 THE AIMS, LIMITATIONS, AND ADVANTAGES bringing to us the productions of all habitable climes, hurrying from one task to another with indefatigable ardor, and assuming a thousand different forms and hues, according to our necessities and desires. " What is annually saved," says Adam Smith, " is as regularly consumed as what is annually spent, and nearly in the same time too ; but it is consumed by a different set of people. That portion of his revenue which a rich man annually spends is, in most cases, consumed by idle guests and menial servants, who leave nothing behind them in return for their consumption. That portion which he annually saves (as, for the sake of the profit, it is immediately employed as a capital) is consumed in the same manner, and nearly in the same time too, but by a different set of people, — by laborers, manufacturers, and artificers, who reproduce, with a profit, the value of their annual consumption." We are now entitled to assume that the theory of wealth is a large and complicated one, embracing many curious and difficult problems, and resting upon many general principles or laws, the discovery and development of which constitute a distinct and im- portant science. One of these laws or general facts — the trans- mutations of capital — has been pointed out and briefly elucidated. And we perceive that it is a fruitful one, pregnant with important conclusions and inferences respecting the institution of property and the modes of favoring industry and increasing national wealth. If the science has been successfully cultivated, many more such general laws must have been discovered in it, a knowledge of which is important to the statesman, the merchant, and the philanthro- pist. As Political Economy is expounded in the books, whether by Adam Smith, Ricardo, Sismondi, or Mill, it may, or may not, be well founded and trustworthy in all its parts. Authorities differ on many points. But these men have not been studying a mere chimera, or wasting their energies in a vain pursuit. There are general laws affecting the production and distribution of wealth, whether they have been discovered or not ; and a knowledge of these laws is a very different thing from the practical knowledge, the acquaintance with details, and the natural shrewdness, which enable a man to acquire property, and to take good care of it when acquired. OF THE STUDY OF POLITICAL ECONOMY. 11 And this leads me to remark that Political Economy is not, as many suppose, the art of money-making, any more than meteorol- ogy is the art of predicting the weather. It is no art at all, but a science; for its immediate end is knowledge, not action or the guidance of conduct. The meteorologist says that the phenomena of the atmosphere and the weather, irregular as they are in their occurrence, and obscure as to their immediate causes, must depend on the general principles of gravity and the equilibrium of fluids, and must be referable to general laws, which are legitimate objects of investigation. He may have studied these laws successfully, and still not be so able as an old sea-captain is, who never opened a book on meteorology in his life, to tell what the weather will be the next hour or the next day. It is a point of as much interest and importance to know how a storm occurs, as to know when it will recur. So, after one of those storms in the commercial world which are known as " commercial crises," we may reasonably seek an explanation of the phenomenon, or the cause of its occurrence, though this knowledge should not enable us to tell when another and similar disturbance will happen. The general principles of any science are obtained only by ab- straction, — by leaving out of view many of the details and par- ticulars which actually belong to the case, and thus so far simpli- fying it that we can reason about it with facility. The conclusions at which we arrive by this process are very comprehensive, but do not admit of immediate application. They are true only with cer- tain qualifications and restrictions. They are involved in all the phenomena to which they relate, and have a share in producing them ; but they do not determine the whole of these phenomena. Political Economy, Mr. Mill remarks, is a deductive science, so far as it reasons from assumptions, not from facts. " It supposes an arbitrary definition of a man, as a being who invariably does that by which he may obtain the greatest amount of necessaries, conveniences, and luxuries with the smallest quantity of labor and physical self-denial with which they can be obtained in the existing state of knowledge. It predicts only such of the phenomena of the social state as take place in consequence of the pursuit of wealth. It makes entire abstraction of every other human pas- sion or motive, except those which may be regarded as perpetually antagonizing principles tp the desire of wealth, — namely, aversion 12 THE AIMS, LIMITATIONS, AND ADVANTAGES to labor, and desire of the present enjoyment of costly indulgen- " The conclusions of Political Economy, consequently, like those of Geometry, are only true, as the common phrase is, in the ab- stract; that is, they are only true under certain suppositions, in which none but general causes — causes common to the whole class of cases under consideration — are taken into the account. In proportion as the actual facts recede from the hypothesis, the Political Economist must allow a corresponding deviation from the strict letter of his conclusion ; otherwise, it will be true only of things such as he has arbitrarily supposed, not of such things as really exist. That which is true in the abstract is always true in the concrete, with proper allowances. When a certain cause really exists, and, if left to itself, would infallibly produce a certain effect, that same effect, modified by all the other concurrent causes, will correctly correspond to the result really produced." All legislation which is designed to affect the economical inter- ests of society, or which relates immediately to its commerce, agriculture, or manufactures, is, in truth, an application of the principles of some system of Political Economy to practice, be that system a wise or a mistaken one. It is often a very injurious application of them, because the circumstances which actually limit the principles are lost sight of, and the abstractions by which they were obtained are forgotten. Mischief results ; and " practi- cal men," seeing that the consequences do not square with the theory, call in question the science itself, instead of attributing the error to the faulty application of it. Hence arises an unhappy dissension between theory and practice, to the lasting detriment of both. The Political Economists themselves are somewhat to blame for this result, by pressing too eagerly for the reduction of their favorite doctrines to practice, without regard to the particular cir- cumstances of each case. The general doctrine of Free Trade, for instance, which may be correct when applied to two nations which are similarly situated in every respect, which have grown up under the same institutions and the same laws, and in which the profits of capital, the wages of labor, and the ratio of population to terri- tory are nearly on a level, is extended, by a hasty generalization, to two countries that are contrasted with each other in all these re- OF THE STUDY OF POLITICAL ECONOMY. 13 spects, and in it* application to which, to say the least, the correct- ness of the principle is very doubtful. We have in this country the largest extension of the system of Free Trade which the world has ever witnessed : we have free trade between Maine and Louis- iana, between California and Massachusetts ; and no one doubts that the system is equally beneficial to all these States. But be- fore the system is carried out between England and the United States, we may reasonably inquire whether it will not necessarily tend to an equalization of profits and wages in the two countries, and whether it is desirable here to hasten the operation of the causes which are rapidly reducing the rates of both to the English standard. This subject will be considered hereafter; but I may say here, that the question does not relate to the correctness of the general principle in economical science, but only to its applicability under particular circumstances. That all terrestrial bodies gravi- tate to the centre of the earth is a general law, which is not dis- proved by the floating of a cork in a basin of water. Another prejudice against Political Economy has arisen from an error of an opposite character, — from too strict a limitation of it to the causes affecting the increase of national wealth, the other interests of a people being undervalued or left out of sight. The English Economists of Kicardo's school have most frequently fallen into this error ; looking merely to the creation of material values, they have tacitly assumed that this was the only interest of society, the only end which legislation should have in view. The proposition on which they act, though they seldom directly enun- ciate it, is, that the augmentation of national wealth is at once the sign and the measure of national prosperity. We may admit that it is so, if the wealth be distributed with some approach to equality among the people. But if the vast majority of the nation is beggared, while enormous fortunes are accumulated by a few, — if, pauperism increases at one end of the social scale as rapidly as wealth is heaped up at the other, — ■ then, even though the ratio of the aggregate wealth to the aggregate population be constantly growing larger, the tendency of things is downward, and, sooner or later, if a remedy be not applied, society will rush into degrada- tion and ruin. In order to obtain a broader field of inquiry, the subject to be discussed in this volume will be, the general well-being of society, so 14 THE AIMS, LIMITATIONS, AND ADVANTAGES v far as this is affected by the moral causes regulating the production, distribution, and consumption of wealth. It may be doubted whether the whole of this theme is included within the limits of Political Economy properly so called; and therefore I propose to consider not only the science itself, but its application to a par- ticular case, — the circumstances and institutions of the American people. Hitherto, history has been in the main a political record, — a narrative of wars, conquests, and changes in the form of gov- ernment. But the social economy of different states has now be- come the chief object of interest, even to the historian. Statesmen have been obliged to make the study of politics second to that of political economy. The idea of political freedom, of choosing their own governors and managing their own affairs, is no longer attractive enough to lead the people, if it be not united with some project for a new organization and a more equal enjoyment of the goods of this life. Hence the rise of so many schemes of Social- ism and Communism, which gave a character to the Revolutions of 1 848 wholly unlike that of any other political disturbances re- corded in the previous history of the world. Even if the disastrous consequences of the insane attempts then made to reorganize society should prevent a speedy repetition of the experiment, there is another danger, from which no civilized community is entirely free, • — lest the several classes of which it is composed should cherish mutual jealousy and hate, which may finally break out into open hostilities, under the mistaken idea that their interests are opposite, and that one or more of them possess an undue advantage, which they are always ready to exer- cise in oppressing the others. We need, therefore, to explain and teach the great truths which Political Economy has demonstrated ; — that all classes of society .are inseparably bound together by a community of interest ; that the prosperity of each depends on the welfare of all ; that the national industry must be meagre and profitless in its results if it has not capital or concentrated wealth to co-operate with it ; that an equal division of property would, in fact, destroy or dissipate"that which was divided ; and that the only equality of condition which human nature renders possible is an equality of destitution and suffering. I need not apologize for the science which treats of the creation of wealth, on the ground that it relates only to one of the lower OF THE STUDY 01' POLITICAL ECONOMY. 15 interests of humanity, and that it is not of so much moment for an individual or a society to be rich, as it is, to be -wise, free, in- structed, and virtuous. It is true that wealth is one of the lower elements or supports of civilization, and that the comparative quantity of it is but an imperfect index of national worth and national well-being. But it is also true that wealth is that element of civilization which supports all the others, and that without it no progress, no refinement, no liberal art would be pos- sible. Without property, without large accumulations of wealth, no division of labor would be possible ; and without division of labor, each man must provide by his own toil for all his bodily wants. He must plant, sow, and reap for himself. He must be his own tailor, shoemaker, housewright, and cook. The scholar could no longer devote himself exclusively to his books, the man of science to the observation of nature, the artist to the canvas or marble, the physician to the cure of diseases, or the clergyman to the care of souls. All would be bound alike by the stern neces- sity of daily brutish toil on the most repulsive tasks. National wealth is a condition of progress, — a prerequisite of civilization. It is not in itself ennobling ; but it is that which vivifies and main- tains all the other elements and influences which dignify humanity and render life desirable. Even if popular ignorance and prejudice upon this subject were not dangerous to the state, a liberal curiosity would not rest satis- fied without some knowledge of the laws affecting the creation and production of wealth, — laws which are, in truth, as constant and uniform as those which bind the material universe together, and evince the wisdom and goodness of the Creator quite as clearly as any of his arrangements in the organic kingdom. It is true that men are usually selfish in the pursuit of wealth ; but it is a wise and benevolent arrangement of Providence, that even those who are thinking only of their own credit and advantage are led, uncon- sciously but surely, to benefit others. The contrivance by which this end is effected — this reconciliation of private aims with the public advantage — is often complex, far-reaching, and intricate ; and thus more strongly indicates the benevolent purpose of the Designer. In the instance already given, we have seen that th wealth of an individual, perhaps a sordid and covetous one, h?. vested by him with a view only to his own advantage and security, 16 THE AIMS, LIMITATIONS, AND ADVANTAGES. and to spare himself the trouble of superintending it, still circu- lates through the community without his knowledge, supporting the laborer at his task, supplying means to the ingenious and the enterprising for the furtherance of their designs, and assuming with facility every shape which the necessities or the convenience of society may require. " Let any one propose to himself," says Dr. Whately, "the prob- lem of supplying with daily provisions of all kinds a city like Lon- don, containing about two millions of inhabitants. Let him im- agine himself a head commissary, intrusted with the office of furnishing to this enormous host their daily rations. A failure in the supply even for a single day might produce the most frightful distress. Some, indeed, of the articles consumed might be stored up in reserve for a considerable time ; but many, including most articles of animal food and many of vegetable, are of the most perishable nature. As a deficient supply of these, even for a few days, would occasion great inconvenience, so a redundancy of them would produce a corresponding waste. The city is also of vast ex- tent, — a province covered with houses, — and it is essential that the supplies should be so distributed as to be brought almost to the doors of all the inhabitants. The supply of provisions for an army or garrison is comparatively uniform in hind ; but here, the greatest possible variety is required, suitable to the wants of the various classes of consumers. Again, this immense population is extremely fluctuating in numbers ; and the increase or diminution depends on causes of which some may, others cannot, be distinctly foreseen. Again, and above all, the daily supplies of each article must be so nicely adjusted to the stock from which it is drawn, to the scanty or abundant harvest, importation, or other source of supply, to the interval which must elapse before a fresh stock can be furnished, and to the probable abundance of the new supply, that as little distress as possible may be felt ; — that, on the one hand, the population may not unnecessarily be put on short allow- ance of any article, and, on the other, may be preserved from the more dreadful risk of famine, which must happen if they contin- ued to consume freely when the stock was insufficient to hold out. " Now let any one consider this problem in all its bearings, and then reflect on the anxious toil which such a task would impose on a board of the most experienced and intelligent commissaries, — OF THE STUDY OF POLITICAL ECONOMY. 17 who, after all, could discharge their office hut very inadequately. Yet this object is accomplished, far better than it could be by any effort of human wisdom, through the agency of men who think each of nothing beyond his own immediate interest, — who, with that object in view, perform their respective parts with cheerful zeal, and combine unconsciously to employ the wisest means for effecting an object, the vastness of which it would bewilder them even to contemplate. " It is really wonderful to consider with what ease and regularity this important end is accomplished, day after day, and year after year, through the sagacity and vigilance of private interest operat- ing on the numerous class of wholesale, and more especially retail, dealers. Each of these watches attentively the demands of his neighborhood, or of the market he frequents, for such commodi- ties as he deals in. The apprehension, on the one hand, of not realizing all the profit he might, and, on the other, of having his goods left on his hands, — these antagonist muscles regulate the extent of his dealings and the prices at which he buys and sells. An abundant supply causes him to lower his prices, and thus en- ables the public to enjoy that abundance ; while he is guided only by the apprehension of being undersold. On the other hand, an actual or apprehended scarcity causes him to demand a higher price, or to keep back his goods in expectation of a rise. Thus he co-operates, unknowingly, in conducting a system which no human wisdom directed to that end could have conducted so well, — the system by which this enormous population is fed from day to day. " I say, ' no human wisdom ' ; for wisdom there surely is, in this adaptation of the means to the result actually produced. In this instance, there are the same marks of benevolent design which we are accustomed to admire in the anatomical structure of the hu- man body. I know not whether it does not even still more excite our admiration of the beneficent wisdom of Providence, to con- template, not corporeal particles, but rational free agents, co-oper- ating in systems not less manifestly indicating design, but no design of theirs ; and though acted on„not by gravitation and impulse, like inert matter, but by motives addressed to the will, yet accom- plishing as regularly and as effectually an object they never con- templated, as if they were merely the passive wheels of a machine." It is on a large induction from such cases as this, that political a 18 THE LAISSEZ-FAIRE PRINCIPLE. economists rest their most comprehensive and most noted maxim, — the laissez-faire, or " let-alone," principle, — the doctrine of non- interference by the government with the economical interests of society. True, these interests are in the hands of individuals, who look only to their own immediate profit, and not to the public ad- vantage, or to the distant future. They are not only selfish ; they are often ignorant, short-sighted, and unconscious of much of the work that they do. But society is a complex and delicate machine, the real Author and Governor of which is divine. Men are often his agents, who do his work, and know it not. He turneth their selfishness to good ; and ends which could not be accomplished by the greatest sagacity, the most enlightened and disinterested public spirit, and the most strenuous exertions of human legislators and governors, are effected directly and incessantly, even through the ignorance, the wilfulness, and the avarice of men. Man cannot interfere with His work without marring it. The attempts of legis- lators to turn the industry of society in one direction or another, out of its natural and self-chosen channels, — here to encourage it by bounties, and there to load it with penalties, — to increase or di- minish the supply of the market, to establish a maximum of price, to keep specie in the country, — are almost invariably productive of harm. Laissez faire ; "these things regulate themselves," in common phrase ; which means, of course, that God regulates them by his general laws, which always, in the long run, work to good. In these modern days, the ruler or governor who is most to be dreaded is, not the tyrant, but the busybody. Let the course of trade and the condition of society alone* is the best advice which can be given to the legislator, the projector, and the reformer. Busy yourselves, if you must be busy, with individual cases of wrong, hardship, or suffering ; but do not meddle with the general laws of the universe. The limitations of this " let-alone " principle are nearly as ob- vious as the principle itself. The office of the legislator is not, by his own superior wisdom to chalk out a path for society to move in, but to remove all casual and unnatural impediments from that path which society instinctively chooses for itself. Human laws, if wisely framed, are seldom mandatory, or such as require an active obedience ; they are mostly prohibitive, or designed to pre- vent such action on the part of the few as would impede or limit THE LAISSEZ-FAIRE PRINCIPLE. 19 the healthful action of the many. Vice and crime, for instance, are stumbling-blocks in the path of the community ; they obstruct the working of the natural laws, the ordinances of Divine Provi- dence, by which society is held together and all well-meaning members of it are made to co-operate, though unconsciously, for each other's good. To remove such stumbling-blocks, then, is not to create, but to prevent, interference with the natural order of things. Legislation directed to this end is only a legitimate carry- ing out of the laissez-faire principle. The enforcement of justice in the ordinary transactions between man and man, which often requires further legislation than is needed for the mere prevention of open vice and crime, is another instance of the legitimate exercise of authority by the govern- ment. An individual may not erect a powder-manufactory in the midst of a populous village, nor carry on any operations there which would poison the air with noxious exhalations. His neigh- bors would have a right to call out to him, " Let us alone ; you endanger our lives, and prevent us from pursuing our ordinary occupations in safety.'' These are internal impediments to the natural action of society, and as such the government is bound to put them out of the way. But it is also the duty of the legislature to guard society against external dangers and hindrances. Men are separated into distinct communities, the action of which upon each other is not so much restrained by law, or by the natural requisitions of justice, as is that of individuals dwelling in the same community. The law of nations is a very imperfect code, and, from the want of any supe- rior tribunal to enforce its enactments, it is very imperfectly ob- served. War is either a present evil to be averted or alleviated, or it is a possible future event, the occurrence of which is to be guarded against. For either of these ends, the action of individ- uals within the community may need to be restrained ; for the safety of all, the freedom of all to pursue their lawful occupations without let or hindrance is not to be imperilled through the ava- rice or recklessness of a few. Accordingly, not mere restraints upon importation, but an absolute prohibition of intercourse, an embargo on all navigation, are among the legitimate measures, a necessity for which is created by national dissension and hostility. Independent communities are not always at war with each 20 THE LAISSEZ-FAIRE PRINCIPLE. other ; but they are always rivals and competitors in the great market of the world. This feeling of rivalry is whetted by the different circumstances under which they are placed, by the pecu- liarities in the condition of each, and by the opposition of interests which often grows out of these peculiarities. The legislation of each state is primarily directed, of course, to^ the p'rotection and promotion of the interests of its own subjects ; and thus it often injuriously affects the interests of other nations. There is, there- fore, a good deal of retaliatory legislation on the part of different governments. There is often, on both sides, a keen measure of wits in devising commercial regulations which shall affect, or ren- der nugatory, measures adopted by the rival nation, not exactly with a hostile intent, but with an exclusive view to its own inter- ests, and therefore frequently with an injurious effect upon the in- terests of others. Now, such retaliatory legislation, so far as it operates upon the members of the very community from which it emanates, so far as it limits or restrains the action of all or a por- tion of them, is not an infringement, but an application, of the laissez-faire principle. It is designed to procure for them a larger liberty than they would otherwise enjoy ; if it is effectual, if it answers its purpose, it removes an impediment created by a foreign state, far more serious and extensive than the obstruction which it imposes. The policy of states leads them to seek independence of each other in their economical, almost as much as in their political, relations ; or we might better say that political independence requires that we should not be entirely dependent upon foreigners for the supply of great articles of prime necessity, — that we should have within our own borders, and under our own control, the means of satisfying all our natural and imperative wants. It is not desirable that Massachusetts and Ohio should be rendered so far independent of each other that each could obtain from its own soil, or by the labor of its own inhabitants, all that it can need ; for these two States are one in most of their political relations. Members of the same great confederacy, living under the same laws, and each exercising its due share of influence in the national legislature, neither has cause to apprehend the hostile or injurious action of the other. The political ties between them are strengthened by their dependence on each other for a supply THE LAISSEZ-FAIRE PRINCIPLE. 21 of many of the necessaries of civilized existence. But it is desira- ble that both should be independent, as far as may be, of the great powers of Europe, with whom they cannot be sure of con- tinued friendly intercourse for any time beyond the present, and from whom they are always separated by a great breadth of ocean, and by dissimilarity of customs, institutions, and laws. True independence, in an economical point of view, does not re- quire us to forego all commercial intercourse with other nations : this would be rather a curse than a blessing. But it does require- that each nation should be able to exercise, within its own limits, all the great branches of industry designed to satisfy the wants of man. It must be able to practise all the arts which would be necessary for its own well-being if it were the only nation on the earth. If it be restricted to agriculture alone, or to manufactures alone, a portion of the energies of its people are lost, and some of its natural advantages run to waste. To be so limited in its sphere of occupation, to be barred out from some of the natural and necessary employments of the human race, through the over- whelming competition of foreigners, is a serious evil, which it is the object of a protective policy to obviate or redress. On what- ever other grounds this policy may be objected to, it is surely not open to the charge of being an infringement of the laissez-faire principle, or a restriction of every man's right to make such use as he pleases of his own industry and capital. Its object is, not to narrow, but to widen, the field for the profitable employment of industry, and to second the working of the beneficent designs of Providence in the constitution of society, by removing all artificial and unnecessary checks to their operation. I repeat it, then, that these designs, as shown in the economical laws of human nature (i. e. in the principles of Political Econo- my) through their general effects upon the well-being of society, manifest the contrivance, the wisdom and beneficence, of the Deity, just as clearly as do the marvellous arrangements of the material universe, or the natural means provided for the enforcement of the moral law and the punishment of crime. The lowest passions of mankind, — ostentation and ambition, petty rivalry, the love of saving and the love of gain, — while they bring their own penalty upon the individual who unduly indulges them, are still overruled for good in their operation upon the interests of society ; nay, they 22 THE PEODUCTION OF WEALTH : are made the most efficient means of guarding it from harm, and advancing its welfare. In the vast round of employments in civ- ilized society, there is hardly one in which a person can profitably exert himself, without at the same time profiting the community in which he lives, and lending aid to thousands of human beings whom he never saw. We are all servants of one another without wishing it, and even without knowing it ; we are all co-operating with each other as busily and effectively as the bees in a hive, and most of us with as little perception as the bees have, that each individual effort is essential to the common defence and general prosperity. CHAPTER II. HOW WEALTH IS CHEATED, AND WHAT CONSTITUTES EXCHANGEABLE VALUE : THE MEASURE OP VALUE : HOW WEALTH IS DISTRIBUTED AMONG ITS PRODUCERS. A distinction has been briefly pointed out between wealth and property. Wealth, consists of the aggregate of articles, chiefly material or tangible, though some immaterial products are ranked among them, which supply the wants and satisfy the desires of man ; and the stock of national wealth " is kept in existence from age to age, not by preservation, but by perpetual reproduction. Every part of it is used or destroyed, —generally very soon after it is produced ■ but those who consume it are employed meanwhile in producing more," — not only enough to replace what is con- sumed, but to furnish a surplus, or profit. Property is the owner- ship of these articles, and often remains unchanged, or fixed, for many generations, —just as the river continues, though the water is perpetually running out of it into the sea. As the articles change while the ownership continues, there must be ev.dences of that ownership, or "tickets of transfer," as I have once called them, — mere representatives of wealth, which command a pnce m the market, and are often sold, but which, in themselves, form no addition to the national wealth. Notes and mortgages, bank-bills, bank-stock, stock in any corporation or in the national THE NATURE OF EXCHANGEABLE VALUE. 23 debt, are such representatives. They are mere evidences that the person holding them is the owner of a larger or smaller portion of those articles which really constitute wealth ; and their value to him consists only in the fact that they enable him, whenever he sees fit, to reclaim his property, or to take possession of those ar- ticles which actually belong to him, though for a time he has trusted them to others. The national wealth, therefore, does not consist of the land, the houses, the manufactured goods, etc., plus the public funds, bank- stock, and the like. These funds and stocks are not wealth in themselves, but are certificates of ownership of those articles which really constitute riches. Nay, if any portion of these stocks is held by foreigners, the aggregate wealth of the community does not consist even of the whole amount of those articles within its territory which are properly considered as wealth, but only of that amount minus the evidences of indebtedness to foreigners. If I buy $ 1,000 worth of government securities, I really lend $ 1,000 to the government, which, in return, mortgages to me a portion of its revenues, or of the sum which it annually raises by taxation. This sum is that portion of the valuable articles annually created by the labor of the community which the government appropriates to itself, as a compensation for the care and protection which it affords. What I really own, then, is this share of the useful ar- ticles annually produced by the labor of the whole people, which is transferred, first by the people to the government, and then by the government to me. The scrap of paper, called " public stock," which I hold, is of no value whatever, except as it enables me to claim without dispute my share of this annual product. These truths are elementary, and sufficiently obvious ; but it was necessary to state them in order to clear the ground for the solution of the problem with which we are now concerned : — What are the essential qualities of wealth, and how is it created? How is it, that the national stock of wealth, which we are perpet- ually consuming, is yet perpetually reproduced, and that, too, with a profit, or constant enlargement, so that the stock at the end of the year is considerably larger than it was at the year's commence- ment? As soon as we clearly perceive that wealth consists exclusively of those useful articles, chiefly material or tangible, which have been 24 THE PRODUCTION OF WEALTH : indicated, and that we have nothing to do with the intricate com- plications of property which arise from the dealings of men in the banks and the stock-market, the answer to this question becomes very easy. Wealth is created by devoting human labor to the pro- duction, and fashioning of these useful articles; — by tilling the ground, and raising harvests of food and of the raw materials for manufacture; by spinning, weaving, and sewing; by erecting houses, working mines, and building ships ; by any and every ap- plication of industry which is essential to the full enjoyment of these articles, or which has directly or indirectly concurred in their formation. Human labor, whether skilful or unskilful, whether applied alone or artfully assisted by natural agents, is the means ; wealth is the product. Whatever is necessary in order that the workman may apply himself more directly and successfully, and with less interruption, to his task, must be considered as a portion of the industry which concurs in the formation of the article pro- duced by that workman. Thus, he must feel secure in his employment, — secure against violence, robbery, or any improper or wrongful interruption of his labor. Government affords him this security, and is, to this ex- tent, a coworker and fellow-producer with him, so that it rightful- ly claims a share — a very small share — of the finished product. " On the governor, and those with whom he is associated, or whom he appoints," says Mr. Senior, " is devolved the care of defending the community from violence and fraud ; and so far as internal violence is concerned, and that is the evil most dreaded in civilized society, it is wonderful how small a number of persons can provide for the security of multitudes. About 15,000 soldiers, and not 15,000 policemen, watchmen, and officers of justice, protect the persons and property of the eighteen millions of inhabitants\ of Great Britain." The co-operation which the laborer requires, in a highly civilized community, for the completion of his task, in order to present the article in a state fit for use, is far more extensive than we are apt, at first sight, to imagine. Thus, bread is a finished product, the total value of which must compensate a long line of laborers who have concurred in its formation. The tradesman who brings it to your door ; the baker ; the miller ; the farm-laborers who plough, sow, and reap ; the farmer or land-owner ; and all the artisans THE NATURE OF EXCHANGEABLE VALUE. 25 who have fabricated all the tools and instruments used by these persons, — must all have their share of the price finally paid for the bread which is fully prepared to be eaten. The extensive co- operation of employments, produced *by the minute subdivision of labor, is the most striking feature of modern civilization. The ob- ject of this immense subdivision is to secure the greatest possible efficiency of labor ; — that everything may be produced on the spot best suited for its production ; that every step in the process of its manufacture may be taken by the person most capable of tak- ing it to advantage, and under the most favorable circumstances ; and that the article itself, when finished, may be adapted, even in the, slightest particulars, to the wants, tastes, and convenience of those who are to use it. The value which may be added to the article by the numerous steps of this long process may be very great. " We should probably be understating the difference," says Mr. Senior, " if we were to say that the last price was a thousand times the first. The price of a pound of the finest cotton-wool, as it is gathered, is less than two shillings. A pound of the finest cotton lace might easily be worth more than a hundred guineas." We gain another view of this marvellous co-operation of individ- uals, designed to make labor most efficient, by searching out the history, analyzing the cost, and tracing the processes of manufac- ture, of all the articles of our own daily consumption. We think it little to sit down to a table covered with articles from all quar- ters of the globe and from the remotest isles of the sea ; — with tea from China, coffee from Brazil, spices from the East, and sugar from the West Indies ; knives from Sheffield, made with iron from Sweden and ivory from Africa ; with silver from Mexico, and cotton from South Carolina ; all being lighted with oil brought from New Zealand or the Arctic Circle. Still less do we think of the great number of persona whose united agency is required to bring any one of these finished products to our homes, — of the merchants, insurers, sailors, ship-builders, cordage and sail makers, astronom- ical-instrument makers, men of science, and others, who must con- cur before a pound of tea can appear in our market. In view of these circumstances, it is no exaggeration to say, that the humble artisan, who spends his life — to adopt Adam Smith's illustration — in making the eighteenth part of a pin, and is hardly fitted for any higher employment, still taxes the industry of half the human 26 THff PRODUCTION OF WEALTH : race, and lays under contribution the four quarters of the globe, to supply his daily wants. How is it that, while, in these days, men will not often labor for nothing, and while the artisan himself produces nothing but the fraction of a pin, he is still able to consume so great a variety of products, and to make the industry of so vast a multitude tribu- tary to his comforts ? The answer may be given in one word, — by exchange: As human labor is the only motive power, so capa- bility of exchange is the sole directing agent, in the great social machine for the production of wealth. The immediate measure of the wealth, when produced, is, not its utility, but its exchangeable value ; and Political Economy itself, as I have already remarked, has been denominated Catallactics, or the Science of Exchanges. We come, then, to an analysis of exchangeable value, in order to find a basis for the theory of wealth. What is it that constitutes value in exchange, and why do various articles possess it in such unequal proportions? The answer is, that exchangeable value consists of two elements, — utility, and difficulty of attainment. The article valued must in some measure be useful ; that is, it must be adapted to satisfy, either directly or indirectly, some nat- ural want or artificial desire of men : and it must also be, more or less difficult to be had. These elements may coexist in very dif- ferent proportions ; but, in one degree or another, they must both be present, or the article has no value in exchange. It may, for instance, be very useful ; it may be an article of prime necessity, absolutely essential to the existence of man. Yet if there be no difficulty in the way of its attainment, if, like the air, the water, and the sunlight, the supply of it be inexhaustible, and open to all the world, then it has no exchangeable value. It forms no part of what is usually called wealth. Supply the element which was lacking,— only make the article hard to be procured, as water is in the midst of the sandy desert of Sahara, or as air was to Mr. Holwell and his companions in the Black Hole at Calcutta, — and men will give all that they have in the world for a single draught of either. On the other hand, it may be very difficult of attainment ; it may, like some of the most refined products of chemical analy- sis, require the labor of years, the greatest scientific skill, and an expenditure of the most costly materials, before it can be procured. Yet if it be not useful, if it do not satisfy some want or desire, THE NATURE OF EXCHANGEABLE VALUE. 27 — however artificial or irrational that desire may be, — it com- mands no price in the market ; it has no exchangeable value. But we do not here speak of abstract utility, or of that utility which is determined by reason and measured by a philosophical standard. Utility here means nothing hut fitness or capability to satisfy any desire of men, however unreasonable, extravagant, or capricious that desire may be. If men are so foolish as to prize highly many articles which answer no purposes but of vain osten- tation or gross and sensual enjoyment, it is not for the political economist, who views things only as they are, — not as they ought to be, — ■ to censure their folly. He leaves this office to the moralist or the preacher. The fact that such articles are coveted, from what- ever motive, is enough to bring them within his definition of wealth ; which definition, it is evident, only expresses the common sentiment of mankind. As the words value and utility are often used in the moralist's sense, or according to their philosophical import, it is necessary to give this caution once for all, — that whenever in future they are here used, they must be understood only in their politico-economi- cal signification. By value, we mean only exchangeable value; by utility, we mean only that utility which is an element of wealth, and which consists in fitness to satisfy any want or desire, however irrational, that is felt by any number of men. This analysis of value, this explanation of what wealth is, leads us immediately to an understanding of the manner in which wealth is created. As the essence of value consists in difficulty of attain- ment, so the labor which overcomes that difficulty is the great means of producing value, or creating wealth ; and everything which diminishes that difficulty is to be considered as labor, — is entitled to be called by that name, for it is recognized and compen- sated as such by the community. And here is. the great paradox of Political Economy : — Value depends on difficulty of attainment ; the only way of creating values is to lessen or overcome that diffi- culty ; but as soon as all difficulty is overcome, when there is no longer any obstacle in the way between man and the gratification of his desire, then exchangeable value also disappears, and the boundless wealth, which Beemed just within our grasp, is suddenly changed, as by a magical incantation, into dross or nothingness. This paradox is not created merely by an abuse of abstract defini- 28 THE PHODUCTION OF WEALTH : tions and theoretical reasoning. The seeming contradiction is a literal fact, as may be clearly shown by a practical illustration. Gold surely possesses the highest value in exchange, and is emi- nently difficult of attainment. The story, first promulgated in the winter of 1848-49, that it abounded in the soil of California, caused as much excitement and agitation in this country, and in- deed throughout the civilized world, as would have been created by another battle of Waterloo. Did it ever occur to any of the gold-hunters at that time, that their hopes would be just as much frustrated by finding that the precious metal there was too plenti- ful, as by ascertaining that it was not to be found at all 1 Let us suppose that the most exaggerated reports had been correct, — that all the rocks of the Sierra Nevada itself were composed in great part of gold, — that there were gold mountains in California, just as there are iron mountains in Missouri. Is it not certain that the value\>f gold all over the world, almost at once, would sink to about the same point with iron 1 Then carry the supposi- tion one step farther. Imagine that it is not necessary to go to California for this metal, but that our own streets are paved and our gutters lined with gold, which also, in lumps, strews the whole face of the country. Is it not evident, that it would instantly be- come as valueless as the stones and dirt which now cover our streets and roads ? How vain, then, is it to expect that wealth can ever be created without labor, which is its natural and necessary price ! Gold is now so precious precisely because so much labor is required to ob- tain it. What a pity it is that the old alchemists, many of whom were the most learned men of their times, and who wasted fortune and life in their vain pursuit, could not have foreseen that the phi- losopher's stone, when discovered, would be as worthless as another stone, which should have the property of turning everything it touched into granite ! The useful metals, generally, possess value just in proportion to the fewness and unproductiveness of the mines whence they are obtained, and to the labor required for bringing them to market and giving them the forms and qualities that fit them for use Iron in th» country owes nearly all its value to the labor expended in extracting it from the ore and manufacturing it; for iron ore is so plentiful that, except in a few favorable localities, where fuel is THE NATURE OF EXCHANGEABLE VALUE. 29 abundant and transportation easy, an acre of ground with iron ore for its surface is worth hardly as much as the same extent of fertile land. Yet fine steel cutlery and watch-springs, which are only iron in a highly finished state, sell at a high price by the ounce. Copper, again, being more rare, and the mines of it less produc- tive, owes its value chiefly to its scarcity, or the labor required for finding it and bringing it from a distance. Yet it is so natural an illusion to believe that the high value of these metals in their manufactured state attaches to them also when they are in the ore, that a mining mania is more easily excited in the community than any other speculative bubble. What I have called the paradox of political economy, like the hydrostatic paradox, is really very simple, and admits of an easy explanation. In proportion as the labor required for obtaining any useful article is diminished, and the article itself consequently be- comes very common, in that proportion it approximates the charac- ter of those invaluable gifts of Providence, the air, the water, and the sunlight, which, because they are common and inexhaustible, have natural, but no exchangeable, value. They become natural wealth, they cease to be artificial wealth. Man does not, in the economical sense, value them, or consider them as wealth, because he is not able to exchange them for those things which can be pro- cured only by labor ; or, in other words, he cannot purchase labor with them. The possession of them conveys no distinction, does not exalt one above his fellows, gives no power over other men. Each of them satisfies one imperative want, and in this respect is truly mvaluable ; but it does not possess that quality which is characteristic of all articles that are usually considered as wealth ; — any pne of these may be bartered for more or less of any arti- cle or product whatsoever that the possessor may desire. We are wont to consider money as the universal medium of exchange, though it is only a contrivance for facilitating it : this is a conse- quence of the popular delusion which confounds money with wealth. Any portion of wealth, any article of value, is, like Fortunatus's wishing-cap, a means of obtaining, to the extent of its exchangeable value, whatever other article we may desire ; the contrivance of money rendering the process of obtaining it by exchange a very simple one. This Protean character of wealth, this capability of satisfying whatever want or whim the heart of man can conceive, 30 THE PRODUCTION OF WEALTH : is, like the ductility of gold, its most peculiar and attractive quality. And here we perceive the explanation of the fact which has so often been a topic of complaint, that the pecuniary wages or earn- ings of scientific and literary men are, with a few rare exceptions, very inconsiderable. The inadequacy of the pecuniary compensa- tion of these persons " arises from a variety of causes ; but princi- pally, perhaps, from the indestructibility, if we may so term it, and rapid circulation of their works and inventions. The cloth of the manufacturer and the corn of the agriculturist are speedily consumed, and there is therefore a conttnual demand for fresh sup- plies of the same articles. Such, however, is not the case with new inventions, new theories, or new literary works. They may be universally made use of, but they cannot be consumed. The moment that the invention of logarithms, the mode of spinning by rollers, and the discovery of the cow-pox had been published, they were rendered imperishable, and every one was in a condition to profit by them. It was no longer necessary to resort to their authors. The results of their researches had become public prop- erty, had conferred new powers on every individual, and might be applied by any one." As they can no longer be appropriated, the difficulty of attainment, which is a necessary element of artificial wealth, is entirely removed ; they therefore cease to possess ex- changeable value, and become a part of what we have called the natural wealth of mankind. Observe, moreover, that it is in the highest departments of lit- erature and science that labor is most imperfectly remunerated ; in those of a lower rank, in adapting to popular comprehension and purposes of practical utility the ideas and discoveries of others, tact and industry may often reap a considerable pecuniary reward. Hence, invention is usually more profitable than discovery ; a new machine may create a fortune for its inventor, whilst the discoverer of those abstract principles of science, or general laws of nature, which are applied in the mechanical improvement, or are presup- posed in the construction of it, can obtain no compensation but the fame of his labors and the gratitude of posterity. No one thinks of rewarding the heirs of Franklin and (Ersted for those discoveries in electricity and electro-magnetism to which we are primarily indebted for the lightning-rod, the electrotype, and the THE NATURE OF EXCHANGEABLE VALUE. 31 magnetic telegraph. Ideas cannot be patented, or exclusively ap- propriated ; but machines may be. So also in authorship, as Mc- Culloch observes, " though a work should have the greatest influ- ence over the legislation of the country or the state of the arts, it may redound but little to the advantage of the author. Many a middling novel has produced more money than the ' Principia ' or the ' Wealth of Nations ' ; and in this respect the ' Decline and Fall of the Roman Empire ' has been far inferior to the ' Arabian Nights.' " " Learning hath gained most," says old Thomas Fuller, " by those books by which the printer has lost." The conversion of artificial into natural wealth — a considerable loss in exchangeable value being a real gain to the whole community — may be further illustrated by an example borrowed from Mr. Senior. " If the climate of England could be suddenly changed to that of Bogota, and the warmth, which we extract imperfectly and expensively from fuel, were supplied by the sun, fuel would cease to be useful, except as one of the productive instruments employed by art ; [that is, in metallurgy, driving steam-engines, etc.] We should want no more grates or chimney-pieces in our sitting-rooms. What had previously been a considerable amount of property in the fixtures of houses, in stock in trade, and materials, would be- come valueless. Coals would sink in price ; the most expensive mines would be abandoned ; those which were retained would afford smaller rents. All would gain in enjoyment by being able to devote to other purposes the money which they previously paid for artificial warmth.' Still, for a time, there would be less [artifi- cial] wealth ; [and there would be permanently a great gain in natural wealth.'] The capital and the labor previously devoted to warming our apartments would be diverted to the production of new commodities. The cheapness of coal would increase the sup- ply of manufactured articles, and there would then be as much wealth as there was before the change, — probably more, and cer- tainly much more enjoyment." As to the nature of the labor which ends in the production of wealth, it is justly remarked by McCulloch, that "all the. opera- tions of nature and art are reducible to, and really consist of, transmutations, — th^; is, of changes of form and of place. Bi production, in this science, is not meant the production of matter^ that being the exclusive attribute of Omnipotence, but the pro- j2 the pkoduction of wealth. duction of utility, and consequently of value, by appropriating and modifying matter already in existence, so as to fit it to satisfy our wants and contribute to our enjoyments. The labor which is thus employed is the only source of wealth. Nature spontaneous- ly furnishes the matter of which all commodities are made ; but until labor has been applied to appropriate that matter, or to adapt it to our use, it is wholly destitute of value, and is not, nor ever has been, considered as forming wealth. Place us on the banks of a river, or in an orchard, and we shall infallibly perish of thirst or hunger, if we do not, by an effort of industry, raise the water to our lips, or pluck the fruit from its parent tree. It is sel- dom, however, that the mere appropriation of matter is sufficient. In the vast majority of cases, labor is required not only to appro- priate it, but also to convey it from place to place, and to give it that peculiar shape without which it may be totally useless, and incapable of ministering either to our necessities or our comforts. Of the innumerable variety of animal, vegetable, and mineral pro- ducts, which form the materials of food and clothes, none was originally serviceable, while many were extremely noxious to man. It is his labor which has given them utility, that has subdued their bad qualities, and made them satisfy his wants and minister to his comforts and enjoyments." We distinguish three kinds of industry : — 1. The labor of collecting and appropriating natural products. This includes the work not only of the agriculturist, but of the miner, the huntsman, the fisherman, and all others who bring to- gether for the use of man the various products of sea and laud which satisfy his wants. 2. The tasks of the manufacturer, the mechanic, and the arti- san, who shape, combine, and fabricate raw materials into forms fit for use. 3. The business of the merchant, who brings together the pro- ducts of various climes, distributes them among the people in pro- portion to their means and wants, and equalizes the supplies and prices of commodities by storing them up for future use, or carry- ing them where they are most needed. Again, the commodities which constitute M^alth may be divided into two classes : — 1. The articles which are designed for imme- diate consumption, and which directly satisfy the wants' of man ; THE MEASURE OF VALUE. 33 such as food and clothing that are fit to be eaten and worn, the houses that shelter us, and the ornaments and luxuries that gratify our tastes. These may be said to have Primary value. 2. The tools, implements, and raw materials, by means of which, or out of which,, the former articles are made, but which, in their present shape, are not fitted for our immediate gratification or support. These last possess only a kind of Secondary or derivative value, as they are prized, not for their own sake, but for what can be made out of them, or obtained by their aid. Thus far it has been shown, that labor is not only necessary in fact for the creation of value, but enters into the very idea of it, so that, when the necessity for labor departs, the reality and even the conception of value vanish along with it. I now say that the labor required is a measure of the value produced. But here the word labor must be taken in its .most comprehensive signification. I mean by it any human exertion whatever, corporeal or intellectual, which, directly or indirectly, overcomes or diminishes that difficulty of attainment which we have seen to be an essential ^element of wealth. The only measure of such labor is its comparative efficiency. Thus, the labor of one practised and skilful artisan is equal to that of at least three raw hands, or ordinary laborers, as they are termed; in some cases it may equal that of many more. The labor, chiefly intellectual, of general superintendence and skilful direction of the operatives employed in a manufactory may be measured by the ordinary labor which it saves, ■ — that is, by the number of additional workmen, or the additional time, that would be needed if such superintendence were wanting ; or it may be measured by the scarcity of the peculiar skill and tact which are required for such superintendence, — that is, by the difficulty of finding a competent superintendent. So the value of a machine may be either the labor which it saves, or the labor which it costs. If, for instance, a manufacturer introduces a new machine, by the aid of which two men can do the work that formerly required ten men, (two more persons being required to build the machine and keep it in repair,) he will save the labor of six persons ; and the value of this machine to him will be represented by six laborers working gratuitously. This will be the case, however, only so long as he can keep the machine 3 . " ' 34 THE MEASURE OF VALUE: a secret from other manufacturers, or enjoy the exclusive use of it. When its use becomes general, the general saving of labor, by re- ducing the cost of the manufactured article, will also reduce its price; for that which costs the labor of but four persons will ex- change for the labor of not more than four. No one will give any- thing more for any commodity than it would cost him to produce it for himself; and in the case supposed, any four workmen, by employing such a machine, might manufacture the article for themselves. Now then, the value of the machine will be only the labor which it costs ; the articles produced by it will represent the labor of but four persons, — two to work it, and two more to build and keep it in repair. The general law, therefore, that the labor required is a measure of the value produced, is subject to two limitations : the first is, that, allowance must be made for the various degrees of efficiency of the several laborers employed ; the second, that the maker has not the advantage of a patented machine or a secret process, which might enable him to produce the commodity by a smaller expendi- ture of labor than is usual. According to Adam Smith, a work- man accustomed to the use of the hammer, but not accustomed to making nails, cannot manufacture usually more than 300 nails in a day ; while such is the dexterity acquired by practice, that about 2,300 can be made in a day by a workman who has never exercised any other trade than that of making nails. The value of one day's labor of such a workman, in this manufacture, will be evi- dently equal to that of seven or eight days' labor by an ordinary smith. It is equally obvious, that the exclusive use of a machine, or a secret process, might render the articles produced by three ordinary workmen the full equivalent in value of those manufac- tured by thirty or forty hands working without any such advantage. When the use of machinery has diminished the exchangeable value of certain commodities, the question may be asked, What has become of the difference between their former and their present cost 1 ! The difficulty of obtaining these commodities is diminished, the labor required to overcome that difficulty is con- sequently lessened, and therefore, according to the principles al- ready laid down, less exchangeable value is created. Suppose cloth to be the commodity manufactured, and that the price was formerly ten cents a yard, while it can now be had for four cents. THE DISTRIBUTION OF WEALTH. 35 All of that cloth which is already in the market will now be held at only two fifths of its former value. What has become of the other three fifths'! Is this amount of exchangeable value de- stroyed, and is the introduction of labor-saving machinery, there- fore, an evil to the community ] The answer is, in this case as in the former one, that the ex- changeable value of the commodity is diminished ; but what is taken away from t/iat value is added to what I have called the natural wealth of the people, in distinction from their artificial wealth, — to the stock of those things, like the air and the sun- light, which are of pre-eminent utility, but, being universal and in- exhaustible, cannot be exchanged for anything. That this is true may be seen at once by putting the extreme case. Imagine that the machine, instead of saving only three fifths of the labor, should save the whole of it ; imagine that some contrivance should be hit upon for producing cloth in unbounded profusion, no labor of man being required in any part of the process. It is obvious that we should then obtain cloth on the same easy terms on which we now obtain air and light. It would be an addition to the natural wealth of mankind ; but as any person could have as much of it as he wished, without difficulty, he would not give in exchange for it anything which had cost him labor : it would have no exchangeable value. And as a machine which would save the whole of the labor would transform the whole exchangeable value into natural wealth, so, if it saved but three fifths of the labor, it would add that-three fifths to our natural wealth. Observe, however, as before, that this result would follow only if the use of the machine became common. If its inventor or first introducer could keep it to himself for a time, he could ex- change the cloth which cost him the labor of only four men for articles which cost others, and would cost him, the labor of ten men ; because it would take ten persons, without the aid of the machine, to produce the cloth. The value produced is measured by the average of the labor required for making or obtaining the commodity, and not by the greater or smaller amount of labor which circumstances might render necessary in a particular case. If any person has a monopoly granted by the government, or a secret process, or a machine which others cannot imitate, he can turn to his own exclusive advantage the value which would other- wise be added to the natural wealth of the community. 36 THE MEASURE OF VALUE: Accident, or good fortune as it is called, may have the same effect as a monopoly or a secret process. Take the pearl-fishery, for instance. The value of the pearls obtained will be determined by dividing the whole amount, procured in one day by the whole number of divers employed during that day ; and by dividing the quantity obtained in the whole season by the number of days in that season ; — thus ascertaining the average cost of the pearls in labor. But the business is a mere lottery • one diver may bring up, from his first plunge, a pearl worth a hundred dollars; another may dive for a week, and obtain little or nothing. If a capitalist should undertake the business, and pay fixed wages to all the divers on condition of receiving all the pearls which they found, his profits, or the value of the pearls, would evidently be determined by their average cost in labor, and not by individual and' extraordinary cases. When Mr. Senior, who denies that labor is essential to the creation of wealth, asks triumphantly, " If, while carelessly lounging along ' the sea-shore, I were to pick up a pearl, would it have no value 1 !" and, "Supposing that aero- lites consisted of gold, would they have no value 1 !" he might be answered, that accidents and miraculous events are supposed to be eliminated when we are reasoning upon the general principles which govern ordinary events ; and that, if pearls were common enough to be often found by loungers on the sea-shore, or if showers of golden aerolites were so frequent as no longer to ap- pear miraculous, certainly both the pearls and the gold would have little or no value. I have dwelt at length upon the two fundamental maxims of Political Economy, that labor is the source of wealth, and that the wealth produced is in exact proportion to the labor expended, and is therefore measured by it ; because, obvious and unquestion- able as these truths may appear, they are yet such as the world is slow to recognize and reluctant to act upon. Here in America, especially, too many people spend their time and waste their sub- stance upon vain projects for getting rich without labor. They hope that some one of those accidents, or pecxiliar circumstances, which we have noticed as occasionally disturbing the regular pro- portion of value to labor, may fall to their lot : that is, for it amounts to nothing else, — that they may become rich at the ex- pense of their fellows ; that they may, by some invention, or per- THE DISTRIBUTION OF "WEALTH. 37 haps some roguery, be able to exchange four days' labor for ten days' labor. They will take shares in a copper-mine, or go to California to dig gold, or commit any other extravagance, though it should be demonstrated to them that the average return, the whole profit divided i>y the whole number of adventurers, would not keep one from starvation. Take another instance. Three persons out of four, when the temptation is brought home to them, will buy a ticket in a lottery; though this is the only adventure ever offered to the public, in which, avowedly, the net result is not a gain, but a loss. For $ 120,000 received as the price of tickets, perhaps $ 100,000 are returned in prizes ; that is, the adventurers expect that only fiVe sixths of what they have invested will be returned to them, in- stead of getting back the whole and a profit besides. And the $ 100,000 returned are divided into so few prizes that nineteen out of twenty of the ticket-holders must suffer a total loss of their investment. But one fortunate person — one out of 60,000 — must receive $ 20,000 for two invested. And yet lotteries are so popular that they must be forbidden by law, in order to pre- vent clerks from robbing their employers for the sake of investing money in them. Coming back to the subject of the co-operation and the compen- sation of labor, it may be remarked, that the seemingly complex and difficult process of dividing the ultimate value of the finished article equitably among all those who have had a share in its pro- duction, is really accomplished with ease, through the number of exchanges it undergoes at the different stages of its manufacture. At each stage, labor effects a change in its form, bringing it nearer to the state in which it is fitted for consumption ; at each ex- change, therefore, it has more labor vested in it, and consequently buys more labor vested in other products, the difference being the compensation of the last parson who has made an alteration of its form. » What regulates this difference, and causes each producer to be paid in exact proportion to the labor which he has bestowed, is the competition, of other producers. Wheat, for instance, is first sold or exchanged as wheat, the price paid for it being the compen- sation of the farmer by whose care and labor it was raised. As labor is the measure of value, a quantity of wheat which repre- 38 THE MEASURE OF VALUE : sents five days' labor must be exchangeable for a quantity of cloth which also represents five days' labor, — no more and no less ; — no more, because this would induce the cloth-maker to turn farmer ; no less, because the farmer would then turn cloth-maker. No man will give six days' labor in any one product for another product which he might himself raise in five days. It may be said, that he who has long practised a particular trade or art will be reluctant to exchange it for another, as he would thereby sacrifice the skill which he has obtained by experience, and be obliged to serve another apprenticeship to a new handicraft or profession. But it must be remembered, that employments can be kept full only by a succession of young and fresh hands constantly entering them ; and these persons will choose, of course, the occu- pation that is most profitable. Thus the number of those who pursue the art which is underpaid will rapidly diminish, while the number in the more profitable branches of industry will increase, until an equality of gains among all these branches is re-estab- lished. Exchanges then regulate themselves, and must be made on equal terms. The farmer having received a fair compensation for his work, the miller next obtains the wheat, and, having converted it into flour, sells it to the flour-merchant at an advanced price, because more labor is now vested in it. In like manner, it passes successively into the hands of the retail dealer, the baker, and the consumer, at each stage acquiring an additional value in exchange just sufficient to compensate, on an average, the labor expended upon it at that stage. Competition, then, when it is free, or competition modified by custom, determines the distribution of the value of a product among those who have concurred in its production. How far it may be modified by custom depends on circumstances. Mr. Mill justly observes, that competition has become "the governing principle of contracts only at a comparatively modern period"; and that " the relations, more especially, between the land-owner and the cultivator, and the payments made by the latter to the former, are, in all stages of society but the most modern, deter- mined by the usage of the country." It was thus that, in many European countries, the serfs were gradually elevated, first into the condition of free tenants, and finally -of absolute owners of the THE DISTRIBUTION OF WEALTH. 39 soil. Their original obligation, to furnish to their lords an indefi- nite amount of provisions and labor, was first transformed into a definite payment of a fixed amount of either ; these payments in kind were next commuted for payments in money, which were established by custom at so early a period, and therefore at so small an amount, that they became mere quit-rents ; and the land was finally ransomed even from these quit-rents by commutation on reasonable terms, so that the former serfs became absolute pro- prietors of the ground. While the peasantry-in most countries of Continental Europe were thus not only emancipated, but secured from want by the owner- ship of the ground which they formerly tilled as slaves, the agri- cultural laborers of England were far less fortunate. All landed property in England was equally of feudal origin ; that is, the land^was admitted to belong originally to the state ; and the im- mediate vassals of the crown, or the tenants in capite, held it only on condition of rendering certain services and payments, that might be considered as rent. Just so, the practice of subinfeuda- tion being introduced, these vassals of the crown parcelled out their respective lands to a set of inferior tenants, many of whom were originally serfs, — on condition, first, of certain services and supplies being rendered ; next, of a definite payment in kind ; and then, of an ordinary money rent. Thus the inferior tenantry were the vassals of the great landholder, in the same manner, and upon the same terms, upon which the latter was a vassal of the crown, both being still called tenants in the language of the law. As the prerogatives of the crown were gradually diminished, and the liberties of the people increased, the nobility and landed gen- try, the original tenants in chief, gradually lessened the feudal burdens upon their land, which consisted in services and payments, and finally, in Charles the Second's time, shook off the remnant of them altogether,' artfully exchanging what had become a mere land-tax for an excise on beer and ale. Thus they became abso- lute owners of their holdings or tenements. But they had no dis- position to make the same concessions to their own tenantry, which they had themselves exacted from the crown. The English peas- antry have not been able to retain their lands, even on condition of paying the full original rent for them. They have subsided into the class of tenants at will, ground down by rack-rents for a 40 THE MEASURE OF VALUE : century or two, and at last expelled from the land altogether, to find their subsistence where they may. The feudal dues from the lands of the tenants in chief were slowly transformed into a species of land-tax, and at last abrogated entirely ; while the same dues from the lands of the inferior tenantry were transformed into annual rents, augmented in amount by every increase in the value of the land ; and when the peasants, from misfortune or bad man- agement, could no longer pay them, they were ejected from the es- tate altogether, and became mere laborers for wages, or paupers. The effect of custom in modifying competition has also been seen in Ireland, where the custom of what is called tenant-right has sprung up, prevailing almost universally in the north, and grad- ually extending itself into the centre and west of that unhappy country. " My view of tenant-right," says Mr. Senior, " is, that it is the difference between the rent actually charged by the land- lord according to the custom of the country [which is a sort of quit-rent], and the utmost competition value [which is rack-rent]. In some cases, it is said to be founded on improvements made by the tenant on his farm, the beneficial effects of which are not ex- hausted, so that the outgoing tenant claims a right to sell them. The landlords, most of whom are absentees, and therefore unable to watch and know the changes which time produces on the an- nual value of their estates, have so long received an unvarying sum as the rent of each farm, and each farm has remained so long in the possession of one tenant, that the customary rent, or quit- rent, is now considered as all which the landlord is entitled to re- ceive ; and whatever the land is really worth beyond this sum accrues to the benefit of the tenant. If this' tenant wishes to quit the holding, custom gives him the right to sell what we should call " the good-will of the farm " for his own benefit ; that is, the incoming tenant pays his predecessor a handsome bonus for the privilege of taking the farm on the old fixed rent, which is now much below the annual value of the ground. An enterprising landlord sometimes buys up this " right " for himself, in order that he may once again enter into full possession of his property. Custom is here seen modifying the full effect of competition on the price of land, because the farm is not actually let to the high- est bidder ; and it often has equal influence on the prices of other commodities. Among the publishers of books, for example, the THE DISTRIBUTION OF WEALTH. 41 courtesy of the trade, as it is termed, often restrains one house from issuing a rival edition of a work unprotected by copyright be- fore the edition published by another, who first risked the enterprise, is exhausted. So, also, as Mr. Mill remarks, "all professional re- muneration is regulated by custom. The fees of physicians, sur- geons, and barristers, the charges of attorneys, are nearly invariable. Not certainly for want of abundant competition in those profes- sions ; but because the competition operates by diminishing each competitor's chance of fees, not by lowering the fees themselves." But competition is the general rule ; and the effect of unre- strained competition is to distribute the value of a product equally among its various producers, leaving neither to any of them, nor to the consumer, any just ground of complaint. Each receives in exact proportion to the labor which he has bestowed ; the labor of all was equally necessary to present the article in its finished state ; and he who finally consumes it, therefore, justly pays all by rendering an equivalent amount of labor. Monopolies and scarcity- values exist only when competition is barred out by a patented invention or a secret process, and occasion a temporary enhance- ment of price and inequality of distribution. But these excep- tions, in modern times, are of limited duration and moderate amount. The patent soon expires, the secret process soon becomes known, and equality of distribution is then restored. I place stress upon this point, because the effect of sharp compe- tition is, in some measure, to blind our eyes to the fact, that we are indebted to the friendly co-operation of labor for all the neces- saries, all the comforts, all the luxuries, which we enjoy. This co-operation and mutual dependence of all the arts and trades, all the branches of industry, all ranks and professions, is one of the most valuable lessons of Political Economy ; and the fair rivalry which causes the distribution of values among them, in proportion to their respective industry and skill, ought hot to create feelings of mutual jealousy and dislike, — ought not to give rise to the cry that one class is taking more than its due share of the com- mon product. ' It is impossible that any class, as a class, should be unduly favored. Individual cases there may be, where fortune, or singularly propitious circumstances, may swell one's gains be- yond the common standard. But as a general rule, competition, if unfettered, must tend to reduce them to an equality. The 42 THE MEASUKE OF VALUE : manufacturer is no more dependent upon the agriculturist than the agriculturist is upon the manufacturer. The merchant is equally dependent upon both, and both depend equally upon him. Even the common laborer is as much indebted to his employer as his employer is to him ; each rendering a peculiar service, without which the finished product could not be placed in the market or exchanged for other products. The prejudice which prevents this truth from being generally recognized is the very natural one, which considers the value of the finished product to reside chiefly in the raw material, and, when that is bulky and cheap, to believe that the great enhance- ment of its price, which takes place as it passes through the hands of the manufacturer and merchant, is a needless and arbitrary thing, an injury both to the farmer aud the consumer. But it is not so r in either case, a modification of the article is effected, and the difficulty which the consumer finds in obtaining it in a form fit for use is lessened ; and it is easy to show that all the modifi- cations which it successively undergoes conduce to that end. AVe cannot consume or use raw cotton, corn in the husk, or unground wheat. The transformations effected by art are as necessan T pre- liminaries to use, and therefore produce wealth just as much, as the transformations effected by nature. " The industry which prepares," says Torrens, " is, necessarily, in the order of time, secondary to that which appropriates the gifts of nature. But though man must originally have lived by merely availing himself of nature's spontaneous gifts, yet the very first, or, at most, the very second step towards knowledge and im- provement, must have led him to the attempt of superadding to these gifts some rude species of preparation. Almost the whole of the productions of nature are presented to us in a new or rude state, and, if it were not for the application of labor to the pre- paring and forming of them, would be absolutely without utility. Without manufacturing or adaptive industry, therefore, our wealth would be necessarily limited to that scanty supply of necessaries which nature presents in a state fit for immediate consumption. Man would be reduced to a more destitute and helpless state than that in which he has ever yet been found, even in the most bar- barous and savage countries." Commerce, moreover, as a source of wealth, is equally produc- THE DISTRIBUTION OF WEALTH. 43 tive with manufacturing and appropriate industry. The most pre- cious fruits of the earth cease to constitute wealth when there is a superabundance of them, and when they no longer find wants to satisfy. Commerce comes to restore utility to them, to replace them among the articles of wealth, by transporting them to places where they are wanted. Of what avail is it for me to know, that there is tea enough in China, and coffee enough in the West Indies, — that there is cotton to spare in Carolina, and a surplus of wheat in Ohio, if some kind person will not intervene to bring these articles to my doors, and offer to me the precise quantity of each which I need, in exchange for other articles, of which I may have a super- abundance ? To accomplish this transportation and distribution, — each individual being accommodated with what he wants, as much as he wants, and where he wants it, — a large apparatus of means is necessary. Ships must be built and appointed, warehouses must be stocked, correspondence must be arranged, and the supplies must be nicely adapted to the wants and means of each locality which is to be provided for. " Roads, railways, canals, post-offices, mints, exchanges, banks, horses, carriages, the professions of bankers, merchants, brokers, factors, carriers, merchant-seamen, and many more, may be regarded as parts of the immense, complicated, and most costly apparatus of exchange.'' The problem already men- tioned, that of supplying a large city with all its necessaries and comforts, must be solved in every part, — in all its complex details. Commerce is what renders possible that vast division of labor, to which the industry of civilized man owes nearly all its superior efficiency over that of the savage. He who devotes a lifetime to the manufacture of one small article — needles, for instance — must accumulate an immense store of them ; and the quantity needed by any one family is so small that, if he would find pur- chasers for his whole stock, without the help of professed traders, he must give two thirds of his time to seeking purchasers of what he manufactures in the other third. The merchant takes up his whole stock at once, giving him its full value in whatever he most needs in return. It is a mere truism to saj% that whoever converts an idle and superfluous thing into a highly useful one creates wealth. The merchant does this, by making one man's, or one country's, superfluity supply another's wants ; he does it by exchanging superfluities, and thus equalizing the bounties of Prov- 44 THE MEASUKE OF VALUE. idence. By his instrumentality, the hard and ragged soil of Mas- sachusetts, with its long winter, yields to its industrious cultivator all the fruits of the tropics, all the productions of the most favored climes. The merchant equalizes the gifts of nature in another manner, by transportation in time, as well as in space. The surplus from an unusually abundant harvest he stores up in reserve against the possible deficiency of the next season. He giv.es the alarm, when there is the slightest reason to fear that the next crop may be a failure, by raising the price of the stock already on hand, and thus renders the people economical in its consumption. Through all these methods, his agency in the production of wealth is so important that he richly earns the portion of it which falls to his lot in the general distribution of values. , There is a common opinion, that the mere exchange of one ar- ticle for another cannot create any additional value, and hence, that whatever may be gained by one party to the transaction must necessarily be lost by the other. But it is not so : Mr. Babbage has clearly illustrated the truth that both parties may be equally profited by the mere interchange of their commodities. " It is found by experience," he says, " that the upper leather of boots made in France is better and more durable than the upper leather manufactured in England. On the other hand, it is found that the leather prepared in England for the soles of boots is less permeable by water, and more durable, than that made in France. Let us suppose that, in each country, a pair of boots will endure twelve months' continual wear, after which time they are thrown aside. In England, the destruction of the boots will arise from that of the upper leather ; whilst in France, it will be caused by that of the sole. Let us also suppose that the upper leather of France will wear three months longer than the French soles, and, reciprocally, that the soles of England will wear three months longer than the English upper leather. Under these circumstan- ces, it is clear that, if the inhabitants of each country insist on making their boots entirely with the produce of their own tanner- ies, the average duration of a pair of boots, both in France and England, will be twelve mouths. Let us assume, for the sake of simplicity, that in each country the upper leather and the soles have the same value. Then it is equally clear, if England were THE DIVISION OF LABOR. 45 to give to France a million pair of soles in exchange for a million pair of French upper leathers, that one million of the inhabitants of each nation would find their boots last during fifteen instead of twelve months." The sum of the two commodities so exchanged evidently has a greater value after the exchange than before ; and the question may be asked, Whence has the profit arisen 1 France and England having both been benefited, is there any third party at whose ex- pense their joint profit has been acquired 1 Mr. Babbage rightly answers, that " the advantage is most frequently won by industry and knowledge from nature herself. The superior natural advan- tages of England — say, better bark, water, climate, etc. — for producing soles, and the superior natural advantages of France for producing upper leathers, instead of being confined to the natives of each country separately, are now, after the exchange, enjoyed equally by both." CHAPTER III. THE DIVISION OF LABOR : ITS BENEFICIAL AND INJURIOUS CONSE- QUENCES : EFFECTS OF THE INTRODUCTION OF MACHINERY. The analysis of the nature of value, and of the distribution of wealth among its producers, has already brought us to the conclu- sion, that the co-operation of many laborers with each other is one •great cause of the efficiency or productiveness of labor. Labor is divided in two ways. First, by allotting different portions of a pro- cess to different hands, all co-operating with each other in the pro- duction of one article ; as when eighteen workmen are employed in one pin-manufactory, each devoting himself exclusively to one of the eighteen distinct operations into which the making of a pin is divided. The second kind of division takes place by the separa- tion of employments, the several sets of laborers being employed at different times and places, and in distinct pursuits, so that their co-operation with each other, though real, is not so obvious as in the former case. These two modes of the division of labor, says Mr. Wakefield, may be termed Simple Co-operation and Complex Co-operation. The Co-operation of distinct trades, and the Co- 46 THE DIVISION OF LABOR. operation of workmen in different portions of one process, tend equally to render labor more efficient. Thus, the manufacturer is just as dependent on the miner, the agriculturist, and the trader, as the workman who makes the head of a pin is on him who cuts the wire and him who sharpens it. The services of all are needed before all the community can obtain the article in its finished state ; and therefore the ultimate and highest value of that article, the price of it when ready for con- sumption, is to be divided among all who have concurred in its production, each receiving in proportion to the labor he has be- stowed. When is it " ready for consumption " ? Not surely as soon as it has received the last touch of skill in the workshop, but only when it is offered to the person who wishes to use it, — offered, as it were, at his own door, in just the quantity that he desires, and in exchange for the only article which he is able to give for it. Here the intervention of the trader is needed ; a peculiar task is to be performed, which can be done to advantage only by one who devotes himself to it altogether, without complicating it with other employments. The wholesale dealer takes off the manufacturer's whole stock, sparing him the labor of finding nu- merous purchasers of particular quantities ; the retailers divide this stock, and circulate it through the length and breadth of the land, offering to each small villager just as little as he needs, and receiving in exchange, (sometimes through the intervention of money, and sometimes by direct barter,) whatever product the vil- lager has to offer. The importance of the service thus rendered appears from the large portion of the ultimate value of the fin-* ished product which falls to their share ; the profits of retailers in this country average from 10 to 20 per cent., or from one tenth to one fifth part of the values sold. And while competition is free, it is certain, for the reasons already explained, that this is only a fair compensation for their services ; if it were not so, miners, manufacturers, and even common workmen, would turn retailers, and undersell them. I borrow another illustration from Mr. Mill. " In the present state of society, the breeding and feeding of sheep is the occupa- tion of one set of people, dressing the wool to prepare it for the spinner is that of another, spinning it into thread of a third, weaving the thread into broadcloth of a fourth, dyeing the cloth THE DIVISION OF LABOR. 47 of a fifth, making it into a coat of a sixth, without counting the multitude of carriers, merchants, factors, and retailers put in re- quisition at the successive stages of this process. All these per- sons, without knowledge of one another or previous understand- ing, co-operate in the production of the ultimate result, a coat. But these are far from being all who co-operate in it ; for each of these persons requires food and many other articles of consump- tion ; and unless he could have relied that other people would pro- duce these for him, he could not have devoted his whole time to one step in the succession of operations which produce one single commodity, a coat. Every person who took part in producing food, or erecting houses, for this series of producers has, however unconsciously on his part, combined his labor with theirs." The advantages of Simple Co-operation, which was formerly re- garded as the only kind of Division of Labor, have been admi- rably illustrated by Adam Smith. An example of the effects produced by the Division of Labor may be taken from a very hum- ble branch of industry, the manufacture of playing-cards. " It is said by those engaged in the business, that each card, before being ready for sale, undergoes no less than seventy operations, every one of which might be the occupation of a distinct class of work- men. And if there are not seventy classes of work-people in each card-manu&ptory, it is because the Division of Labor is not carried so far as it might be ; because the same workman is charged with two, three, or four distinct operations. The influence of this distribu- tion of employments is immense. I have seen a card-manufactory where thirty workmen produced daily 15,500 cards, being about 500 cards for each laborer ; and it may be presumed that, if each of these workmen were obliged to perform all the operations himself, even supposing him a practised hand, he would not perhaps com- plete two cards in a day ; and the thirty workmen, instead of 15,500 cards, would make only 60." The business of watch-making in England is said by Mr. Bab- bage to have been divided into 1 02 distinct branches, to each of which a boy may be put apprentice, and taught to practise it ex- clusively, without learning to work at any other branch. " The watch-finisher, whose business it is to put together the scattered parts, is the only one, out of 102 persons, who can work at any other department than his own." 48 THE DIVISION OF LABOK. f The prodigious increase in the efficiency of labor, caused by- division of the task, is attributed by Adam Smith to three causes. 1. The increased dexterity, corporeal and intellectual, acquired by frequent repetition of one simple operation. The laborer thus acquires a sleight of hand, enabling him to perform his task with a rapidity which, to those who have had no experience in the work, appears truly marvellous. A child who fastens on the heads of pins will repeat an operation requiring several distinct motions of the muscles one hundred times a minute, for several successive hours. Gymnastic exercises, many feats of jugglery, and the ease and brilliancy of execution acquired by experienced performers on musical instruments, are other cases, as remarkable as they are familiar, of the rapidity and facility acquired by repeti- tion. The same is true of operations exclusive^ mental ; a prac- tised accountant sums up a column of figures with a quickness that resembles intuition. 2. The saving of the time which is commonly lost in passing fro^n one species of work to another, and in the change of place, position, and tools. Thus, says Smith, " a country weaver who cultivates a small farm must lose a good deal of time in passing from his loom to the field, and from the field to his loom. When the two trades can be carried on in the same workhouse, the loss of time is, no doubt, much less. Even in this case, however, it is very considerable. A man commonly saunters a little in turning his hand from one employment to another." " When the human hand, or the human head," adds Mr. Babbage, " has been for some time occupied in any kind of work, it cannot i»stantly change its employment with full effect. The muscles of the limbs employed have acquired a flexibility during their exertion, and those not in action a stiffness during rest, which renders every change slow and unequal in the commencement. Long habit produces also in the muscles exercised a capacity for enduring fatigue to a much greater degree than they could support under other circumstances." So, also, in the use of tools, time is lost in shifting from one to another ; and when many implements are required for the different occupations, at least three fourths of them must be constantly idle and useless. " A certain quantity of material will in all cases be consumed unprofitably, or spoiled, by every person who learns an art ; and as he applies himself to each new process he will THE DIVISION OF LABOR. 49 waste some of the raw material, or of the partly manufactured commodity. But if each man commits this waste in acquiring successively every process, the quantity of waste will be much greater than if each person confines his attention to one process. And in general, each will be much sooner qualified to execute his one process if he be not distracted, while learning it, by the ne- cessity of acquiring others." 3. The invention of a great number of machines, which facili- tate and abridge labor in all its departments. The division of labor reduces a complex operation to many simple tasks, each of which is incessantly repeated ; and this is precisely what machines may be made most easily to perform. The whole of a workman's attention, moreover, being directed to one simple object, easier and readier methods of obtaining that object are more likely to occur to him, than when his thoughts are dissipated among a variety of things. I have heard that most of the improvements in machin- ery, which have been made of late years in the manufactories at Lowell, were first suggested by the common workmen who were engaged in tending the machines. In the first steam-engine, says Adam Smith, " a boy was constantly employed to open and shut alternately the communication between the boiler and the cylinder, according as the piston either ascended or descended. One of those boys, who loved to play with his companions, observed that, by tying a string from the handle of the valve which opened the communication to another part of the machine, the valve would open and shut without his assistance, and leave "him at liberty.'' Thus, one of the most important steps in the improvement of steam-engines was made by an idle boy. 4. Another advantage derived from the Division of Labor was first pointed out by Mr. Babbage, — the more economical distri- bution of labor, by classifying the work-people according to their capacity. " Different parts of the same series of operations re- quire unequal degrees of skill and bodily strength ; and those who have skill enough for the most difficult, or strength enough for the hardest, parts of the labor, are made much more useful by being employed solely in them ; the operations which everybody is capa- ble of, being left to those who are fit for no others." Thus, in a cotton manufactory, men, women, and children are employed on different portions of the work, and, of course, at very different 4 50 THE DIVISION OF LABOR. rates of wages. Obviously there would be a great waste if men were employed to perform tasks which children might do as well, or if fingers which are delicate enough for hem-stitching and embroidery were devoted to raising heavy weights or swinging sledge-hammers. In needle-making, the scale of remuneration for different parts of the process, performed by different work-people, varies from sixpence to twenty shillings a day. 5. One of the principal advantages of the Division of Labor, says Mr. Senior, " arises from the circumstance that the same ex- ertions which are necessary to produce a single given result are often sufficient to produce many hundred or many thousand simi- lar results. The Post-Office supplies a familiar illustration. The same exertions, which are necessary to send a single letter from Falmouth to New York, are sufficient to forward fifty, and nearly the same exertions will forward ten thousand. If every man were to effect the transmission of his own correspondence, the whole life of an eminent merchant might be passed in travelling, without his being able to deliver all the letters which the Post-Office forwards for him in a single evening. The labor of a few individuals, de- voted exclusively to the forwarding of letters, produces results which all the exertions of all the inhabitants of Europe could not effect, each person acting independently." The extent of the Division of Labor must always be limited by the extent of the market. Ten workmen can make 48,000 pins in a day ; but they cannot do so to advantage unless there is a daily consumption of pins to that amount. If there be a daily demand for no more than 24,000 pins, they must either lose half the day's work, or change their occupation, — that is, lessen the Division of Labor by engaging in two separate tasks. Hence, the Division of Labor cannot be carried to its farthest limit except in the case of products capable of distant transport and the conse- quent increase of consumption ; or where the manufacture is car- ried on amidst a dense population, creating an extensive local de- mand. Where the population is limited, many trades, elsewhere distinct, are practised by the same individual. In a small village, the same person is surgeon, doctor, and apothecary ; while in a large city there is separate employment for each of these practi- tioners, and even for subdivisions of their profession into the several occupations of dentists, oculists, accoucheurs, etc. The THE DIVISION OF LABOR. 51 village grocer deals not only in groceries, but in dry-goods, crockery, hardware, books, and stationery ; and if a Yankee, he may also edit, print, and publish a newspaper, keep a school, and go to Congress. In large cities, the sale of a single article of grocery may form a large and lucrative business : in Boston and New York, there are shops where nothing is sold but tea. All improvements in the modes of transportation, as by roads, canals, and railways, obviously promote the Division of Labor, by widen- ing the market which each locality can command for its special products. " The Division of Labor is also limited, in many cases," says Mr. Mill, " by the nature of the employment. Agriculture, for ex- ample, is not susceptible of so great a division of occupations as many branches of manufactures, because its different occupations cannot possibly be simultaneous. One man cannot be always ploughing, another sowing, and another reaping. A workman who only practised one agricultural operation would be idle eleven months of the year. The same person may perform them all in succession, and have, in almost every climate, a considerable amount of unoccupied time. The combination of labor of which agricultural industry is susceptible is chiefly that which Mr. Wakefield calls Simple Co-operation, ■ — many persons employed together in the same work. To execute a great agricultural im- provement, it is often necessary that many laborers should work together ; but in general, except the few whose business is super- intendence, they all work in the same manner. A canal or a rail- way embankment cannot be made without a combination of many laborers ; but they are all excavators, except the engineer and a few clerks." The advantages of the Division of Labor, however, we must ad- mit, are subject to one serious drawback. Few things tend so effectually to dwarf the mind and stunt the faculties as the inces- sant and long-continued repetition of a very simple task, — a mechanical movement, which is repeated with as little effort of thought as if it were performed by a machine. Even Adam Smith remarks, that constant application to such a task " neces- sarily renders the workmen as stupid and ignorant as it is pos- sible to make a human being.'' And Say adds, that "a man whose whole life is devoted to the execution of a single operation 52 THE DIVISION OF LABOK. will most assuredly acquire the faculty of executing it better and quicker than others ; but he will, at the^eame time, be rendered less fit for every other occupation, bodily and intellectual ; his other faculties will be gradually blunted and extinguished, and the man, as an individual, will degenerate in consequence. To have never done anything but make the eighteenth part of a pin is a sorry account for a human being to give of his existence." The division even of intellectual labor, however it may tend to excellence, and insure success 1 , in a single department, is not without a similar pernicious result. The successful pursuit of a single art, or of the fraction of a single science, is but poor com- pensation for the loss of all versatility and alertness of mind, and for allowing most of the faculties to rust by disuse. One may become a good accountant, an expert mathematician, even a skilful lawyer, without being anything more than the fraction of a man. " The difference of natural talents in different men,'' says Adam Smith, "is, in reality, much less than we are aware of ; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not, upon many oc- casions, so much the cause, as the effect, of the Division of Labor. The difference between the most dissimilar characters — between a philosopher and a common street-porter, for example — seems to arise, not so much from nature, as from habit, custom, and edu- cation. When they came into the world, and for the first six or eight years of their existence, they were very much alike, and neither their parents nor playfellows could perceive any remarka- ble difference. About that age, or soon after, they come to be em- ployed in very different occupations. The difference of talents comes then to be taken notice of, and widens by degrees, till, at last, the vanity of the philosopher is willing to acknowledge scarce any resemblance. But without the disposition to truck, barter, and exchange, every man must have procured to himself every necessary and conveniency of life which he wanted. All must have had the same duties to perform, and the same work to do; and there could have been no such difference of employment as could alone give occasion to any great difference of talents." " As it is this disposition which forms that difference of talents so remarkable among men of different professions, so it is this EFFECTS OF IMPEOVED MACHINEEY. 53 same disposition which renders that difference useful. Many- tribes of animals, acknowledged to be all of the same species, derive from nature a much more remarkable distinction of genius, than what, antecedent to custom and education, appears to take place among men. By nature, a philosopher is not in genius and disposi- tion half so different from a street-porter, as a mastiff is from a greyhound, or a greyhound from a spaniel, or this last from a a shepherd's dog. Those different tribes of animals, however, though all of the same species, are of scarce ahy use to one another. The strength of the mastiff is not in the least sup- ported either by the swiftness of the greyhound, or by the sagaci- ty of the spaniel, or by the docility of the shepherd's dog. The effects of those different geniuses and talents, for want of the power or disposition to barter and exchange, cannot be brought into a common stock, and do not in the least contribute to the better accommodation and conveniency of the species. Each ani- mal is still obliged to support and defend itself, separately and in- dependently, and derives no sort of advantage from that variety of talents with which nature has distinguished its fellows. Among men, on the contrary, the most dissimilar geniuses are of use to one another ; the different products of their respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into a common stock, where every man may purchase whatever part of the produce of other men's talents he has occasion for.' 7 The superior efficiency and productiveness of industry at the present day, as compared with the industry of former times, is due not only to the Division of Labor, but to the use of better tools and implements, and to the invention of improved machines and cheaper processes of manufacture. Perhaps the leading character- istic of the nineteenth century has been the rapid progress of in- vention, and the consequent multiplication and cheapening of all the material products that satisfy human wants. These improve- ments consist in economizing man's time and industry, either by causing natural agencies, such as steam, electricity, magnetism, or heat, to do the work, or by making a happier application and more frugal use of the powers already employed. " One of the most striking qualities of machinery," says Mr. Senior, " is its suscepti- bility of indefinite improvement." In the manufacture of vron and 54 EFFECTS OF IMPROVED MACHINERY. steel, and the application of them to a vast number of new purpos- es; in the transportation of men and goods, and the transmission of intelligence ; in the use of new materials, such as caoutchouc, gutta-percha, gas, and petroleum ; in the work of a great printing- office, like that of The Times newspaper ; and even in the imple- ments and processes of agriculture now in use, — so much has been accomplished, that we may safely say the amount of possible enjoyment has been quadrupled, and one man now often does what would have been the work of a thousand only fifty years ago. Often the immediate consequence of introducing an improved process, or a new machine, is so to economize human labor that many workmen are thrown out of employment, and wages are, for a while, considerably depressed. In most cases, however, the ulti- mate result is, through cheapening the price, so far to increase the demand for the products, that more persons than ever are employed in their formation, and wages rise again. Eailroads have, in a great degree, created the travel and the traffic which they so much facilitate and cheapen, and thus give employment to labor- ers greatly exceeding in number the stage-drivers and wagoners whose occupations were superseded by them. The invention of printing deprived many copyists of work and wages, but has so multiplied books and newspapers, that there are now probably more persons employed in making books, than there were, in the fifteenth century, in reading them. Generally speaking, the pro- gress of invention has enlarged, rather than contracted, the field for the employment of industry. But I doubt whether it has been so in every instance. The de- mand for an article is sometimes limited by natural causes, irre- spective of its dearness or cheapness ; and in such case, any improvement which will diminish the labor required for its pro- duction must permanently deprive some laborers of employment. Thus, the demand for bread must be limited by the size of the population, — that is, by the number of mouths to be fed : cheapen its production ever so much, and very little more will be called for. Hence, it may be feared, the use of the steam-engine in many kinds of farm-work, and the recent invention of so many sowing, reaping, mowing, and threshing machines, have permanent- ly diminished the number of agricultural laborers, and thereby lowered the rates of wages everywhere, even in manufactures. ' THE NATURE OF CAPITAL. 55 This is one of the causes — others will be pointed out hereafter — why the number of persons engaged in agriculture in Great Britain is constantly becoming less, so that a process of depop- ulating the rural districts seems to be going on, at the same time that pauperism is increasing, and the multitudes who take refuge in the cities and manufacturing towns find little employ- ment there and scant wages. Through the extended use of such machinery, indeed, a great farm comes to resemble a huge manu- factory, in which steam furnishes the whole motive power, and the number of human befngs employed is small out of all proportion to the quantity of work. done. This result is a triumph of inven- tive skill and money-making ingenuity ; but it is a matter of evil omen for the classes who are entirely dependent upon the wages of labor. The recent invention of the sewing-machine has taken away work and wages from many seamstresses, journeymen tailors, and shoemakers ; and I doubt whether it has increased, in any- thing like the same degree, the demand for clothes, boots and shoes, and other sewed fabrics ; since this demand must be regu- lated by the number of people who need to be clothed and shod. The construction of machinery, of railroads and canals, and of great works of irrigation, as in India, not only lessens the demand for manual labor, but takes away from the power of paying wages for it, through converting large amounts of Circulating Capital into Fixed Capital. CHAPTER IV. THE NATURE OP CAPITAL, AND THE MEANS OP ITS INCREASE : CIR- CUMSTANCES WHICH FAVOR THE GROWTH OP CAPITAL : THE SECU- RITY OP PROPERTY. Another circumstance on which the efficiency of labor largeh depends is the co-operation of capital, or stock. All capital if wealth, but all wealth is not capital. The furniture of a ricL man's house, for instance, ■ — his carpets, his plate, his paintings, and much even of the food which is daily placed upon his table, — forms a portion of his wealth, but not of his capital. All thest articles contribute to his enjoyment ; perhaps some of them ar-i 56 THE NATURE OF CAPITAL. necessary for his sustenance; but they do not directly aid him in the creation of other values. As they are consumed, or slowly worn out, they create nothing to replace them, and leave behind them nothing but the remembrance of the gratification which they have afforded. They are the fruit of previous industry in- deed, having been created, as all other values are, by labor ; but with' the exception of the little food which is necessary to support life, they do not sustain present labor, — do not aid in the produc- tion of fresh values. Capital is that portion of wealth which is consumed, not for purposes of mere enjoyment, not for immediate gratification, but to aid in the production of more wealth. It is still consumed, with greater or less rapidity ; but its value disap- pears in one shape only to reappear in another. The necessity for the employment of capital arises from the fact that man cannot labor to any good purpose with his hands alone. He must have tools, implements, machinery, raw material ; if the article on which he is engaged requires time for its manufac- ture, he must be fed, clothed, and lodged while he is occupied in manufacturing it. The aggregate of wealth existing in these various forms, designed either to aid the laborer in his work, or to support him while working, is capital. It is consumed, but its value ap- pears again in the larger amount of wealth which industry pro- duces when thus assisted. The tools and machinery wear out; but the products which they have aided in creating enable the capital- ist to replace them with a profit. Raw cotton is consumed in large quantities, and reappears as cloth ; the seed-corn is buried in the earth, but in a few months the harvest yields twenty or thirty fold. Labor is limited by capital, because labor cannot be prosecuted to any advantage without capital. Yet this fact does not contra- dict our general proposition, that wealth is created by labor alone ; for capital itself is created by labor, and might be called consoli- dated or invested labor. But although labor is thus limited, it is by no means proportioned to the amount of capital employed. A master-shoemaker, with a capital of not more than $ 5,000, may keep twenty journeymen and apprentices in constant employment; while a manufacturer of gold and silver plate, or a wholesale mer- chant, with a capital of half a million of dollars, may not pav wages to more than thirty or forty persons. McCulloch observes, that " a manufacturer's power to employ labor is not measured by the THE NATURE OF CAPITAL. 57 total amount of his capital, but by the amount of that portion only which is circulating capital. A capitalist possessed of a hun- dred steam-engines, and of £ 50,000 of circulating capital, has no greater demand for labor, and does not, in fact, employ a single workman more, than the capitalist who has no machinery, and only £ 50,000, devoted exclusively to the payment of wages." Boots and shoes, for instance, were formerly manufactured without ma- chinery, and with the aid only of a few cheap tools. With a lap- stone, a hammer, a knife, and an awl, the journeyman can begin work ; and even the raw material which he needs is so frequently " turned over," as the phrase goes, or so quickly converted from leather into merchantable boots and shoes, that, if the articles can be sold as soon as they are manufactured, a few dollars will keep him constantly supplied with sufficient stock. On the other hand, an immense capital must be vested in machinery before the busi- ness of weaving cotton or woollen cloth on a great scale can begin. Even in the rudest states of society, among savage nations, capi- tal exists, though in small quantities, and performs its appropriate functions. " The wretched native of New Holland," says Colonel Torrens, " has his spear, his fishing-implements, and his canoe, for the purpose of abridging his labor, — of performing operations of which he would otherwise be incapable, and appropriating produc- tions of nature which, but for the aid of these rude instruments, would forever have remained beyond his reach." Before he labors directly to capture the wild tenants of the forests and the rivers, he labors to prepare himself for the task by manufacturing the necessary implements ; consequently, the exchangeable value of the articles which he finally obtains is measured by the quantity of labor, both direct and indirect, which was devoted to their pro- duction. No one will give labor of either sort for nothing. That which was bestowed on the manufacture of bows and arrows must be compensated just as much, and in the same ratio, as that which was given to the pursuit and killing of wild animals ; otherwise, no /one will make bows and arrows. The law of distribution, therefore, that the value of the completed product will be divided among its producers in exact proportion to the labor bestowed by eaeh, is not altered by the co-operation of capital with labor. The profits of capital are the reward of labor, just as much as the wages directly paid to the laborer. 58 THE NATURE OF CAPITAL. Capital exists, as I have said, among savages ; and it accu- mulates very rapidly with the progress of civilization. So rapid, indeed, is its increase, and so vast becomes its aggregation, that it constitutes the chief difference in point of efficiency between the labor of the savage and that of civilized man. The Australian or the Indian may be as muscular as the European ; he often works as hard, and is even more capable of enduring hardship and privation. He also practises the division of labor to some extent, as a whole tribe often unite in the chase or in war, and make larger captures by acting in concert and parcelling out the work among each other. But their labor on the whole is miser- ably inefficient and unproductive, because it is aided only by a trifling amount of capital. The savage does not amass capital, because he is incapable of foresight and self-denial. What he obtains is devoted to the gratification of the present moment, or is wasted. This, in truth, is the chief reason why he does not till the ground ; he often has knowledge enough for this end, his powers of observation being largely developed. He notices slight peculiarities of vegetation, which escape the eye of the white man, and by this means is often enabled to find his way through the trackless forests. He knows that edible fruits and grains are produced from seed. But he is not economical and prudent enough to reserve seed-corn for agriculture, or to lay in a store of food which will enable him to expend labor on the ground, to dig and plant, with the expecta- tion of reaping the fruits of his labor only after an interval of some months. He is obliged to give all his toil to the necessities of the present hour, because he is not- prudent enough to save, ■and not industrious enough to work when there is no immediate necessity for working. Though the common opinion runs the other way, I believe that man has no natural instinct for saving, no original propensity for labor, —none, at least, that is not constantly overridden by other and stronger propensities. The hardest lesson for children and savages to learn is that of economy, - the necessity of bridling the inclmation or appetite of the moment, with a view to some prospective benefit. Long and hard experience has taught this lesson to the full-grown and reflecting man, and taught it so effectually that, as is often the case, the acquired inclination HOW CAPITAL IS ACCUMULATED. 59 overrides the original impulse, and all other passions are merged, not merely in the love of accumulation, but in that of saving. We not infrequently hear of misers who will give away thousands, while they are depriving themselves almost of the necessaries of life for the sake of saving units. Exertion is naturally pleasant, it is true ; yet only when directed by the caprice of the moment, as in sport ; not the long-continued and monotonous exertion which is necessary for the attainment of a future good. That always requires self-restraint, a contest with and a victory over our original inclinations. This view of the difference between the barbarian and the "civilized man leads directly to a knowledge of the origin of capi- tal, and the means of its increase. It begins in saving, and is enlarged only by the continued exercise of frugality. Labor creates wealth, the object of which is, as we have seen, the grat- ification of desire ; and the portion of wealth which is saved from the gratification of our immediate wants, and reserved to aid our future labor, so that the future product may be greater, is capital. The inducement to the practice of such frugality is always strong enough in a civilized community ; for the ability to save increases in a geometrical ratio with its exercise. C'est le pre- mier pas qui coHte. The hardest struggle, the severest exercise of self-denial, is to make the beginning, — to spare a little from our daily comforts, when as yet we are entirely dependent upon the fruits of our unaided labor. Afterwards, that little which was re- served works along with us, and the surplus is greater at the end of the second year, though we have practised no additional self- restraint. Soon, the aggregate of these savings produces more than our original earnings, and our expenditures may come up again to the full measure of what they would have been if no fru- gality had been practised at the outset ; and yet accumulation goes on as rapidly as if we had been able to reserve the whole original product of our labor, and subsist upon nothing. The in- dustrial organization of society is now so perfect, that the smallest savings can be xitilized, or devoted immediately to active employ- ment as capital. This rapid progress of accumulation, operating like the constantly accelerating force of gravitation, supplies the strong motive for frugality, which operates like a charm in the swift growth of national ppulence. 60 HOW CAPITAL IS ACCUMULATED. It is now easy to explain the difference, on which so much stress is laid, between Productive and Unproductive consumption. Take the case, referred to in a former chapter, of a laborer who has saved $ 100 from his yearly earnings. At the end of the year, having this sum in reserve, he may immediately expend it all in giving an entertainment to his friends, or purchasing finer clothes and furniture for his family. In neither case would the values thus consumed aid, either his labor, or that of any other being : in the first case, it would be consumed all at once, the wine being drunk, the music heard, the delicacies eaten ; and there would be an end of his savings : in the other case, the enjoyment would only be spread over a little longer time ; the clothes and furniture, in the course of a few months or years, would be worn out, and the $100 would then have equally disappeared without return. Such is what is termed Unproductive consumption. But let us suppose, as before, that at the end of the year, he placed the money in a Savings' Bank, or bought a machine with it, by the aid of which his labor would produce half as much again as in the former twelvemonth. In the bank, as has been shown, it would successively and rapidly assume different forms, at each transformation aiding labor or setting it in motion, at each yield- ing a profit, and leaving a final profit for the benefit of him who deposited it. This share of profit accruing to the owner is com- paratively small, because he has committed the management of his property, and the risk of losing it, to others, and they must be paid for the labor and hazard of its superintendence. If he chooses to use it himself, as in the case supposed of purchasing a machine with it, his yearly earnings will be much increased, and the surplus will be enough to keep the machine in repair, to buy another when the first one is worn out, and to leave a larger profit at the end of the year ; which surplus, again, he may spend pro- ductively or unproductively. In all the cases now enumerated, it is evident that the laborer's surplus earnings are consumed. In the first two cases, being con- sumed only to obtain present enjoyment, whether of a longer or shorter duration, they never appear again ; in the last two, being consumed only for the purpose of aiding labor, they reappear in the increased product of that labor. And so it must be in every supposable case, except where the savings are obtained in the form HOW CAPITAL IS ACCUMULATED. 61 of gold or silver money, and are buried in the earth; then, in- deed, they are not consumed, because they are not used at all, either for present gratification or future gain. We see the fallacy, then, of the common opinion, that the prodi- gals who waste their substance in riotous or ostentatious living, though they and their families afterwards suffer for it, are yet bene- factors to the community, because their liberal expenditures keep laborers in employ, increase the profits of shop-keepers, and dif- fuse benefits all around them. He who saves, on the contrary, appears in the light of one who hoards ; saving seems but another word for keeping a thing to one's self, while spending appears to be distributing it among others. This popular error arises chiefly from the fact that the waste- ful person consumes his income and his capital mostly on the spot where he resides, where the public eye can follow his wealth, and see it passing into the hands of laborers, tradesmen, and dependents. But these persons do not obtain it for nothing. They give ser- vices, goods, articles of luxury, in exchange ; and when these services are rendered, and the articles consumed, there is an end of the prodigal's wealth. He has nothing left, and they are but little richer than before, having only made their ordinary gains, or received their accustomed wages. The community, then, is the poorer by the whole amount which the prodigal has squandered. The savings of the frugal person, on the other hand, are often withdrawn from sight of the immediate neighborhood, being quietly invested in a bank or manufactory, where they are con- sumed productively ; that is, they are still applied to the purchase of labor or goods, and so equally keep industry in motion, though this beneficial result is not easily traced back, and ascribed to the proper author of it*. To make this point clearer, I will take a particular example. Suppose a prodigal maintains an establishment of ten menial ser- vants, at an expense of $ 3,000 a year. At the end of the year, he has expended this portion of his capital, and the servants have received their usual wages ; but as they have toiled only to pam- per his desire of enjoyment, and to gratify his love of ostentation, no products of their labor remain at the end of the year, and they are no better off than they would have been if they had obtained equal wages for making boots and shoes, or laboring on a farm. 62 HOW CAPITAL IS ACCUMULATED. Then suppose a frugal person, having an equal sum of $ 3,000 a year to spend, instead of hiring menial servants with it, should in- vest it in the shoemaking business, or in agriculture. It is obvious that an equal number of persons might thus be employed, and at the same wages ; at the end of the year, moreover, instead of noth- ing being left, there would be an additional stock of one or two thousand pairs of boots and shoes, or of four or five thousand bush- els of corn. The capital of the frugal person and the riches of the community would thus be augmented to the extent perhaps of $4,000 (ordinary allowance being made for profits); and this would be a fund for the support of industry, for an indefinite pe- riod, or until it came into the hands of a prodigal who should waste it in luxuries and self-indulgence. It should be observed, that the only fund from which savings can be made, and capital thereby increased, is the annual income or revenue of the individual. If the manufacturer, for instance, at the end of the year, has merely got his capital back again, the values created exactly replacing those which were consumed, though he has preserved his property, he has effected no saving; he is neither richer nor poorer than he was before. His capital ought to be replaced with a profit ; and the aggregate of the profits for a year, not the aggregate of all the values produced during that time, constitutes his income or revenue. This income, like the year's wages of a laborer, seems to be the fund naturally designed for his own maintenance and that of his family. A portion of it must be spent in this manner, — that is, must be spent unproductively ; for health and strength must be kept up by food, drink, and cloth- ing ; in addition to which, in order to keep up the full vigor of mind and body, a small portion of every one's income ought to be devoted to amusement and a few luxuries. But if these personal expenditures, and the replacement of the capital consumed during the year, do not absorb the whole income, what remains is a true saving, an addition to capital, a benefit both to the individual and the community. " It would be a great error," says Mr. Mill, " to regret the large proportion of the annual produce which, in an opulent country, goes to supply unproductive consumption. It would be to lament that the community has so much to spare from its necessities, for its pleasures and for all higher uses. This portion of the produce FIXED AND CIRCULATING CAPITAL. 63 is the fund from which all the wants of the community, other than that of mere living, are provided for, — the measure of its means of enjoyment, and of its power of accomplishing all purposes not pro- ductive. That so great a surplus should be available for such pur- poses, and that it should be applied to them, is a subject only of congratulation. " The wealth which is employed in creating more wealth has been divided by Adam Smith into Fixed and Circulating Capital. " There are two ways," he says, " in which a capital may be em- ployed so as to yield a revenue or profit. " First, it may be employed in raising, manufacturing, or pur- chasing goods, and selling them again with a profit. The capital employed in this manner yields no revenue or profit to its em- ployer while it either remains in his possession or continues in the same shape. The goods of the merchant yield him no revenue or profit till he sells them for money, and the money yields him as little till it is again exchanged for goods. His capital is continual- ly going from him in one shape, and returning to him in another ; and it is only by means of such circulation, or successive ex- changes, that it can yield him any profit. Such capitals, there- fore, may properly be called Circulating capitals. " Secondly, it may be employed in the improvement of land, in the purchase of useful machines and implements of trade, or in such like things as yield a revenue or profit without changing masters, or circulating any further. Such capitals, therefore, may properly be called Fixed capitals." This distinction has been further illustrated by the remark, that Circulating Capital fulfils the whole of its office in production by a single use ; while Fixed Capital produces its effect, not by being parted with, but by being kept, and its efficacy is not exhausted by a single use. Observe, also, that the same articles may be Cir- culating Capital while in the hands of one person, and become Fixed Capital as soon as they are transferred to another. A stock of finished ploughs, for instance, belongs to the former class while they are owned by the manufacturer, or the merchant, who expects not to use, but to sell them, and can obtain his profit only from the proceeds of such a sale ; but they become Fixed Capital whev they are purchased by the farmers, who expect to retain and us* them till they are worn out. 64 THE NATURE OF CAPITAL. Fixed Capital, Adam Smith remarks, " consists chiefly of the four following articles : — " First, of all useful machines and implements of trade which facilitate and abridge labor. " Secondly, of all buildings used for the purpose of trade or manufacture, such as shops, warehouses, and farm buildings. They are a sort of instruments of trade, and may be considered in the game light. " Thirdly, of the improvements of land, — of what has been prof- itably laid out in clearing, draining, enclosing, manuring, and re- ducing it into the condition most proper for culture. An improved farm may be regarded in the same light as one of those useful ma- chines which facilitate and abridge labor. "Fourthly, of the acquired and useful abilities of all the mem- bers of the society. The acquisition of such talents by the main- tenance of the acquirer during his education, study, or apprentice- ship, costs an expense, which is a capital fixed and realized, as it were, in his person. The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labor. " The Circulating Capital is composed likewise of four parts : — " First, of the money by means of which all the other three are circulated and distributed to their proper consumers. " Secondly, of the stock of provisions in the possession of the butcher, the grazier, etc., for the purpose of sale. " Thirdly, of the materials, whether altogether rude, or more or less manufactured, — of clothes, furniture, and building, which are not yet made up, but remain in the hands of the growers, manu- facturers, or merchants. " Fourthly, of the work which is made up and completed, but is still in the hands of the merchant or manufacturer ; such as the finished work in the shops of the smith, the goldsmith, the jewel- ler, and the China merchant. The Circulating Capital consists in this manner of the provisions, materials, and finished work of all kinds, which are in the hands of their respective dealers, and of the money that is necessary for circulating and distributing them to their final consumers." To this enumeration by Adam Smith must be added two classes of articles, which seem to have been excluded by him for insuffi- HOW CAPITAL IS INCREASED. 05 cient reasons ; namely, food and the other necessaries of life, and dwelling-houses. The name of capital has been denied to these two classes of things, because they are consumed as revenue, with a view to subsistence or enjoyment, and not as capital, with a view to production. But it may be replied, that the laborer, before he can construct or fashion anything, must not only have raw mate- rials and tools, but must be secure of a lodging and a dinner. An expenditure for all four of these objects is necessary before he can complete his task ; and the aggregate of such expenditure is there- fore properly considered as an advance of capital, the means for this advance having been previously obtained by abstinence or frugality. The circumstances on which the rapidity of accumulation, or the growth of capital, depends, are various, and the study of them is one of the most interesting researches in which the economist or the historian can engage. Laws and political institutions generally have a vast influence in this respect, as well as differences of na- tional character and peculiarities of geographical position. The results of the former may often be traced, by the light both of theory and history, in quarters where they would be the least sus- pected ; the most prominent and marked effect being frequently at- tributable to the noiseless working, through many generations, of peculiar customs and laws, which do not attract much notice pre- cisely because they are ingrained or deeply seated. Our general question is, When is labor most energetic, universal, and effective in the creation of wealth, and by what means are the motives to accumulation from savings most strongly stimulated 1 I cannot attribute much importance in this respect to what are called the natural advantages of a country, — its genial climate, fertile soil, large expanse of territory, or happy geographical po- sition. These natural advantages, as they are termed, have fear- ful drawbacks in the indolence and sense of security which they foster, and the luxurious habits to which the people who possess them incline, their chief luxury always being .repose. Some of the countries of South America are as highly favored in these respects as any part of the habitable globe ; but it is not to this portion of our continent that we look for instances of the most rapid growth of national wealth. " In the ancient world and in the Middle 5 66 HOW CAPITAL IS INCREASED. Ages," it has been well remarked, " the most prosperous communi- ties were not those which had the largest territory or the most fertile soil, but rather those which had been forced by natural ste- rility to make the utmost possible use of a convenient maritime situation ; as Tyre, Marseilles, Venice, the free cities on the Baltic, and the like." And that we may not over-estimate even this con- venience of position, it should be remembered that Athens, Tyre, and Venice stand just where they did, though their commercial glory has long since passed away. The geographical position of Greece, with its long line of deeply indented sea-coast on a tideless sea, is precisely what it was when Greece almost monopolized the commerce and the arts of the Mediterranean. She is now the most insignificant kingdom in Europe, and with difficulty supports an ignorant and thinly scattered population. Natural wealth enervates both body and mind. Where an abundance can be had with little labor, much labor will never be practised. What seems a paradise on earth, the nearest natural semblance of a Garden of Eden, may be found in the isles of the South Pacific, or in the West Indies, where a race of white colo- nists seem to be fast becoming as feeble and brutish as were the natives whom they dispossessed. Here again, as in so many other instances, we are reminded that the essential quality of wealth, properly so called, is difficulty of attainment, — difficulty that can be overcome only by long and strenuous exertion. The principal causes of the rapid growth of national opulence are moral rather than physical ; a situation which shall make for- eign commerce at least practicable seems to be the only indispensa- ble condition that is not connected with the character of the people. The moral causes which most effectually stimulate labor and frugal- ity, and thereby make capital accumulate most rapidly, are, — 1. That the laborer shall be sure of receiving the full amount of his wages, or shall be protected in the ownership of the values which he has produced. 2. That the skill, intelligence, and education of the laboring classes generally shall be raised to the highest point, — so that, the labor of one well-trained mechanic being as effective at least as that of three raw hands, or mere laborers, the working class shall contain as many as possible of the former, and as few as possible of the latter description. THE SECURITY OF PROPERTY. 67 3. That the savings when made, or the capital when accumu- lated, shall be attended with as high a rate of profit, and as large a measure of physical comfort, social consideration, and political influence as possible. The illustrations which may be offered upon these three points are enough, I think, to prove that they are vastly more important than any amount of natural advantages, including even that on which most stress has been laid, — the inherited qualities of race, or the national, inbred inclination to labor and enterprise. I am no great believer in the natural excellences of Anglo-Saxon blood, but I have- great faith in the acquired excellences of Anglo-Saxon institutions. My reason for distrust in the former element is, that time was, — and not many years ago, — when the Dutch certainly, if not the Swiss also, were decidedly superior to the English in in- dustry, frugality, and the spirit of commercial adventure. In this last respect, even the Spaniards and the Portuguese were ahead of their English competitors. And here in America, where our pop- ulation is a conglomerate of all the races of the earth, the first generation born on American soil, be its parents English, Irish, Dutch, French, or German, is sure to show the characteristic American trait, — a disposition to toil, to dare, and to save. I am inclined to refer this peculiarity altogether to our " institutions " ; ■ — understanding, however, this term in its widest sense ; making it comprehend not merely our republican polity, our national and State organizations, but our republican habits, feelings, and ten- dencies, — our disposition to manage our own affairs in our own town-meetings, and there to allot the greatest trust to him who is distinguished above all others by this very American trait, this dis- position to toil, to dare, and to save, be his race or parentage what it may. First, then, security in the receipt and enjoyment of the fruits of labor is not merely the great stimulus, but the indispensable prerequisite, to general industry and frugality. " Security " means not only the absence of war, tyranny, intestine commotions, and all other causes of spoliation, interference, and undue control, but the absence of any dread, — of any great probability of such un- happy contingencies. Labor and enterprise are elastic, and will quickly recover from the effects of any sudden or unexpected mis- fortune, however great, if the workmen or adventurers think they 68 HOW CAPITAL IS INCREASED. have a reasonable protection against its recurrence. If the calam- ity is such that the country is not actually depopulated by it, the next harvest will make up the temporary scarcity of food, and less than a year's labor will replace the customary stock of manufac- tured commodities ; for the Circulating Capital of the manufacturer is usually " turned over," as the phrase goes, or consumed and re- produced, oftener than once in a year ; and if his Fixed Capital, his machines, buildings, and other improvements, require a little longer time for their value to be restored, (the potent influence of credit causing them to be actually rebuilt in a very short period,) it is still matter of certain calculation, that a few years will make up the loss. But if a dread should hang over the people, lest a simi- lar catastrophe should soon recur, few would labor at all, and these few would put but little heart into their work : not many are willing to produce what others are to consume. The general feeling would be like that which prevails on shipboard after all hope of saving the vessel is lost : " Let us eat and drink, for to-morrow we die." Take, for instance, the once very fertile and finely situated tract, called Mesopotamia from its position between the two great rivers Tigris and Euphrates, — now a parched and dusty plain, roamed over, rather than inhabited, by a few tribes of half-starved Bedouin Arabs. Yet there stood, and there now stand the ruins of, the great city of Nineveh, that " exceeding great city," of three days' journey, which probably contained over half a million of inhabitants. What a vast suburban and rural population must have existed in the immediate vicinity, in order to supply that great and wealthy metropolis with food ! Over three thousand years ago, the banks of the Tigris must have been nearly as popu- lous as are now the banks of the Seine near Paris. Their depopu- lation and consequent aridity — but few traces now remaining of the gigantic works by which that great plain was formerly irrigated — must be ascribed to the constant sense of insecurity arising from many changes of dynasty, predatory inroads, invasion and con- quest, and the rigors of war exercised by barbarian conquerors. Yet these invasions, so far as appears from history, were not so frequent but that the people might with ease have recovered from them during the intervals, had not the constant fear that they might recur at any day gradually paralyzed all effort, till the na- THE SECUKITY OF PROPERTY. 69 tion at last wasted away, and a feeble remnant sought shelter among the mountains, leaving that fertile plain to desolation. Such are the evils of a government which cannot withstand ag- gression from abroad. Hardly less injurious in its effects is the government which is too feeble or indolent to protect the people against themselves ; which cannot enforce the laws, or guard the community against the machinations and violence of the turbulent, the discontented, and the ambitious, so that society is a constant prey to rapine, confusion, and civil broils. Hence the present con- dition of Mexico and most of the South American republics, where, though the soil and climate are among the finest on earth, and min- eral wealth abounds, yet agriculture is impeded, trade languishes, and manufactures cannot be established, the bonds of society being virtually dissolved, and the country wasted by anarchy and misrule. Arbitrary exactions, uncertain in amount, and uncertain as to the time when they will be made, do vastly more injury than larger amounts taken by fixed and regular taxation. Industry will accommodate itself to heavy burdens, and even flourish un- der them, if the pressure be equable and constant, so that all calculations respecting the future may be made with as much cer- tainty as if there were no weight to support. The regular tax comes to be esteemed as one of the charges, or a part of the cost, of production, — having the same effect as a more rigorous climate, or a less fertile soil, would have, in increasing the amount of labor required. The people of the United States, for instance, are at this moment taxed more heavily, — they pay a larger sum to their rulers, than was ever levied from a population of equal size by the most cruel and despotic government of ancient times. If it were possible to distribute the enormous weight of this taxation with perfect equality and fairness, making it bear on all interests alike, and on every individual in just proportion to his means, I should be far from considering it as any material obstacle to the prosper- ity of the country. But the changes which from time to time be- come necessary, or are thought to be necessary, in that distribu- tion, are more serious evils. The change when completed in all its effects, the new law once thoroughly incorporated by time with the old ones, may be an improvement ; but the transition is always injurious. Better a bad system, so that it be fixed, than a fluctuat- ing and uncertain one. An alteration of the law, a shifting of the 70 "HOW CAPITAL IS INCREASED. burden, always produces some change in the direction of labor and capital, whereby a portion of the. skill already acquired by practice is wasted, a portion of the machinery already built becomes use- less, and time and capital must be consumed in learning new employments and constructing new machines. This is one evil caused by change ; and another is, that, most of the operations of industry in modern times being complex, and covering much time and space, people are tempted to engage in them only by the nice calculations that are made of their probable ultimate results : any uncertainty as to the manner in which these results may be affect- ed by taxation, any probability that the law may be changed while the process is yet incomplete, may prevent the enterprise from be- ing undertaken at all. It is not too much to say, that, in this country, for the last fifty years, there has not been a time when commercial and manufacturing enterprise was not materially re- tarded by the apprehension that the Congress then in session, or the ensuing one, might make some important modifications in the tariff of customs-duties, the banking system, and the state of the currency. " The only insecurity," says Mr. Mill, " which is altogether par- alyzing to the active energies of producers, is that arising from the government or from persons invested with its authority. Against all other depredators there is a hope of defending one's self. Greece and the Greek colonies in the ancient world, Flanders and Italy in the Middle Ages, by no means enjoyed what any one with modern ideas would call security ; the state of society was most unsettled and turbulent ; person and property were exposedto a thousand dangers. But they were free countries ; they were nei- ther arbitrarily oppressed, nor systematically plundered, by their governments. Against other enemies, the individual energy which their institutions called forth enabled them to make successful re- sistance. Their labor, therefore, was eminently productive, and their riches, while they remained free, were constantly on the in- crease." " Much of the security of person and property in modern na- tions is the effect of manners and opinion, rather than of law. There are countries in Europe where the monarch is nominally ab- solute ; but where, from the restraints imposed by established usage, no subject feels practically in the smallest danger of having THE ENCOURAGEMENT OF MANUFACTURES. 71 his possessions arbitrarily seized, or a contribution levied on them by the government." These countries — Russia, for instance — are far better off in respect of security than France, where, not long ago, the institutions of government were nominally similar to our own, but where there is great probability of a revolution once a fortnight. No government "is ever wicked enough to aim di- rectly and avowedly at the encouragement of vice, the distress of innocence, and the punishment of goodness. Even an Asiatic despotism professes, and probably intends, to punish theft, perjury, fraud, and unprovoked injury, in all cases where its own interest is not immediately concerned ; that is, of course, in the great ma- jority of cases that arise among its subjects. It may omit many of the forms and precautions that civilized nations have come to observe as the safeguards of innocence and preservatives against unintentional wrong ; it may administer wild justice, but justice is its aim ; it wields the sword against unprovoked aggressions up- on persons or property, and often with terrible effect. CHAPTER V. THE INCREASE OF CAPITAL- AS AFFECTED BY THE ENCOURAGEMENT OF MANUFACTURES, AND BY THE CONCENTRATION OF THE PEOPLE IN CITIES AND TOWNS. The second of the moral causes indicated as affecting the in- crease of capital is, that such increase is most rapid in any coun- try when, from the variety of employments that exist there, most of its inhabitants may be engaged in those occupations for which they are peculiarly fitted by nature, which require most skill and intel- ligence, and in which, consequently, their labor is most productive. If the labor of one practised and skilful artisan is equal to that of at least three raw hands or rude laborers, then it is very much for the economical interests of a country, that as many as possible of its inhabitants should be skilled artisans, and as few as possible should be raw laborers. We say " as many as possible " ; because some rude labor is always needed. There must be, in every coun- try, some hewers of wood and drawers of water, — some work that 72 THE ENCOURAGEMENT OF MANUFACTURES : tasks a man's thews and sinews very severely, while it affords but little employment to his brains, — such work as is often performed by machines and domesticated animals, but which the circumstan- ces of time and place sometimes absolutely require to be performed by men, — usually by men who are capable of nothing else. There is a large proportion of such work required in agriculture, where one skilful and careful farmer can profitably direct the exertions of a dozen or more hands, in such operations as ditching, fencing, making hay, and the like. Many, though not so many, laborers of this lowest class are also required in manufactures, where tiu- merous skilled and expert hands require to be waited on by mere porters and hewers, in order that the valuable time of the former may not be wasted on the coarser operations that are necessary. Thus the bricklayer must have his hod-carrier ; the driver of the steam-engine must have his fireman ; the printing-office must have its errand-boys, technically called " devils.'' Commerce demands a higher average of skill and intelligence from those who are en- gaged in it than any other of the great branches of industry ; yet even here, in the various operations subsidiary to the transporta- tion and exchange of goods, there is a considerable demand for this lowest kind of exertion. We say a " demand " for it, because the fact, that laborers of this class expect only the lowest rate of wages, causes them to be sought for in preference to all others, when the work is such that they can perform it. From various causes, there is an abundance of this kind of labor in the market in almost every country. The stinted bounty of nature ; casualties that lessen the average capacity ; vice, igno- rance, and extreme poverty ; are among the causes which here keep the supply up to the demand, and, in nearly all cases, make it go greatly beyond the demand. The only evil to be dreaded is a su- perfluity of this class of laborers, — a superfluity which sometimes, as at present in Great Britain and Ireland, exists to a frightful ex- tent. Popular education, as that phrase is commonly understood, meaning the general cultivation of the intellect, though unques- tionably a very powerful agent for lessening this evil, is not the only preservative against it. A man wholly uneducated in the common meaning of the word, that is, unable either to write or read, may yet become a very expert workman in the finest and most difficult kinds of manufacture. On the other hand, men KUDE AND SKILLED LABOR. 73 may be quite well taught, and Btill be ( unable to get any but the rudest sort of work to do, or to obtain employment more than half the time even at that. The Scotch, for instance, are a very well educated people ; the standard of instruction among them, for all classes, is probably quite as high as it is in New England. Yet there" is as large a surplus of rude labor in Scotland, in pro- portion to its population, as in England, — probably larger. The loss which a country suffers by having a large portion of its people condemned to this rude labor, when most of them are capa- ble, or might be made capable, of much finer work or more effective industry, is very great ; so great, indeed, that I doubt whether any other single cause of national poverty can equal it. Men are dif- ferently constituted by nature, or by those circumstances which, in early youth, determine the" bent of their inclinations and the applicability of their powers to one task rather than another. The labor of a people is effectually used only when the field of employ- ment in the country offers scope for every variety of taste and talent, and when no formidable or insuperable obstacles prevent any individual from finding out and performing just that task which God and nature appointed him to do. If agriculture alone is pursued, all the mechanical skill of the people is wasted, — all their fitness for commerce, all their enterprise in trade, is wasted. If four millions are obliged to be rude laborers, when three mil- lions of them might be skilled artisans, the labor of one of the latter being supposed to be equal in value to that of at least three of the former, then the value actually created iB to the value which might be created as four is to ten ; in other words, the yearly pro- duct of the national industry might be two and a half times greater than it is ; and the yearly unproductive consumption need not be at all increased, since, in either case, there would be four millions of people to be supplied with food, clothing, and shelter. Of course, — and here comes the application of the principle to pres- ent circumstances, — the country could afford to pay a higher price for their manufactures* for the sake of having the articles manufactured at home. They could afford to spend more, for they would have more to spend. For illustration, we will take the two extreme cases of Ireland and Massachusetts. According to the Irish census of 1841, the whole number of families in Ireland was one million and a half, of whom 74 THE ENCOURAGEMENT OF MANUFACTURES : one million, or just two thirds of the whole, were engaged in agri- culture ; and only three hundred and fifty thousand families, or a little less than one fourth of the whole, were employed in manu- factures and trade. It is obvious that the agricultural population was excessive; for in England, where agriculture is carried to greater perfection than in any other country on the face of the glbbe, there was but one agricultural family to every thirty-four acres of arable land, while in Ireland there was one such family to every fourteen acres. In Massachusetts, according to the State census of 1865, out of 218,600 men engaged in the various branches of industry, about 150,000, or 69 per cent, were employed in manufactures and the mechanic arts, and only 68,600, or somewhat over 31 per cent, in agriculture and its subsidiary employments. The proportions in Ireland, as we have seen, were about 23 per cent in commerce and manufactures, and 66 per cent in agriculture. Now contrast the condition of the people in the two countries. The paupers in Massachusetts are about one in fifty of the whole population ; but as nearly half of these are recent English or Irish immigrants, principally Irish, the real proportion is about one in a hundred. In Ireland, the paupers who received relief in the work- houses during the year 1866, added to the number of out-door poor who were assisted at the public charge, were 270, 1 73, or nearly five per cent of the total population. In 1851, the number of paupers was nearly thrice as great. The cost of relieving these 270,173 paupers was over three millions of dollars. Can we attribute this frightful difference to the unequal distri- bution of the bounty of Providence, — to the fact that the Irish are crowded together on land not broad or fertile enough to supply them all with food, while Massachusetts abounds with the sponta- neous riches of the earth 1 According to the estimate already formed of the effect upon national well-being of what are termed " natural advantages," this is not very likely to be the case ; but let us look at the facts. Here, where our only natural exports are ice and granite, it is notorious that we do not raise food enough for our own consumption. We import nearly all our wheat, the chief article of our breadstuffs, and also buy from the other States large droves of cattle. But Ireland raises more food than is necessary for her sustenance, and exports annually vast quanti- ties of provisions to England. Her export of the cereal grains, RUDE AND SKILLED LABOR. 75 chiefly oats, and of other edible products of the Boil, increased, from less than seven millions of bushels in 1817, to twenty-six millions of bushels in 1845. Even in 1847, the year of famine in Ireland, nearly eight millions of bushels of grain and meal were exported ; and in the following year, which was one of great scar- city, these exports rose again to sixteen millions. It is certain, then, that the penuriousness of nature is not the source of the difficulty ; it is not fertile land which is wanting, but wealth ; and the people do not produce that, because the field of employment is so limited that very little except rude labor is possible. There is no opening for the exertion of skill and enterprise, and whatever natural qualifications the people may possess in these respects can- not be developed. Nearly the whole native population of Massachusetts being oc- cupied with tasks that require skill, care, and ingenuity, we depend for a supply of rude labor almost exclusively upon immigrant for- eigners. These do all the coarse work in building our railways and canals, and in the several other occupations that require noth- ing but muscular strength. Because our own people are so gener- ally trained to the finer and more productive branches of industry, new expedients are constantly invented by them for performing the drudgery by machines. The locomotive steam excavators, that are often employed on the line of a proposed railroad, and the various contrivances that have been patented for cutting and hoisting ice on our ponds, are instances of this sort of labor-saving machinery. The superfluity and consequent cheapness of rude labor in foreign countries render these expedients unnecessary, and the work is profitably done by hand. Consider the rapid growth of capital in this State, which is the result of this most effective application of its industry, and also the immense unproductive consumption of the people, — their ample supply, not only of the necessaries, but of the comforts and luxuries of life ; and contrast these with the poverty and destitu- tion of Ireland. The productive part of the consumption leads to the increase of the national wealth ; the unproductive part is an index of the general well-being of the community. In Ireland, the people are literally too poor to create a demand for anything but potatoes ; and the country therefore affords hardly any market either for British or Irish manufactures. There is but little open- 76 THE ENCOURAGEMENT OF MANUFACTURES : ing there for the mechanic arts, or for the many small occupations which are created by a due regard for the comforts and convenien- ces of life. The field of employment for skilled industry is conse- quently limited almost to a span, and the bulk of the people are driven back upon rude labor in agriculture, — - to ditching, cutting turf, and planting potatoes ; the meagre returns from such toil be- ing hardly sufficient to keep them from starvation. The United States, on the other hand, afford a better market for manufactured goods than any other country of equal population on the globe ; be- cause the universal prosperity of the community enables them to consume more. If the relation of cause and effect in this proposi- tion be reversed, so as to say that the people consume more because they produce more, it will amount to the same thing, and be equally favorable for the purposes of the argument. More wealth is cre- ted, more is consumed, and the amount of enjoyment is thereby increased. Ireland has acted upon this rule, laid down by most political economists, — • always to buy in the cheapest market, whatever may be the effect upon domestic enterprise, drain and other provision can be raised most cheaply in Ireland, owing to the low rate of wages there ; manufactures can be produced to best advantage in England, owing to the abundance of English capital. Ireland, therefore, raises food to buy English manufactures with ; and the present condition of the Irish people is the consequence. They have the advantage, it is true, of the offer of the manufactured goods at prices twenty or twenty-five per cent less than what they command in America; — an advantage which would be more sen- sibly felt if the Irish were not too poor to purchase them at any price. The proposition, I think, can be laid down as a general one, that a country, the population of which is chiefly or altogether devoted to agriculture, cannot become wealthy, whatever maybe the fer- tility of its soil or the favorableness of its situation. Of course, its inhabitants must buy manufactures with food ; that is, they must exchange the products of rude labor for the products of skilled labor ; that is, again, they must give the labor of three per- sons for the labor of one person. The general principle of econom- ical science is, to cause the industry of a country to take that direction in which it can be applied to the greatest advantage. , THE CONCENTRATION OF THE PEOPLE. 77 Now the fertility of the soil is one advantage, and the capacity of the people for the higher departments of labor, their skill and enterprise, is another. There is no reason for allowing either of these advantages to remain latent or unworked ; and in choosing between them, we are to be decided by their comparative amount and importance. Fortunate as this country is in the extent of its territory and the richness of its soil, this advantage is as nothing, — nay, it would turn out to our positive detriment, — if, in con- sideration of it, we should sacrifice the talents and the energies of our people ; — if we should doom our whole population to the rude labor of turning up the earth, for the sake of the trifling advantage of purchasing our manufactured goods at a little lower price. The great mistake of Eicardo and his followers, who have done so much to reduce Political Economy to a mere deductive science, all the conclusions in which are obtained by abstract reasoning from a few arbitrarily assumed premises, is, that they generally treat of labor in the abstract, and make no allowance for these dif- ferences in the quality of the labor. This error vitiates most of the doctrines of this school respecting the nature of Value, and the distribution of the Value created into the three elements of Kent, Profits, and Wages. Even Adam Smith remarks, that " a small quantity of manu- factured produce purchases a great quantity of rude produce. A trading and manufacturing country, therefore, naturally purchases, with a small part of its manufactured produce, a great part of the rude produce of other countries ; while, on the contrary, a country without trade and manufactures is generally obliged to purchase, at the expense of a great part of its rude produce, a very small part of the manufactured produce of other countries." One mode in which the encouragement of skilled labor, leading to the interfusion of manufactures and commerce with agriculture, favors the increase" of national capital, is, by concentrating the population in cities and towns. Agriculture is necessarily diffusive in its effects ; the laborers must be distributed over the whole face of the territory which they cultivate. A few large cities spring up at great distances from each other, as an outlet for the com- merce created by the exchange of the surplus agricultural products for manufactured goods and other necessaries brought from abroad. The great agricultural districts of Continental Europe, the wheat- 78 THE ENCOURAGEMENT OF MANUFACTURES : plains of Poland and Southern Russia, find an outlet at the cities of Dantzic and Odessa ; and we may remark in passing, that the poverty and general low condition of the inhabitants of these dis- tricts show the effects of confining a whole population to the rude labor of tilling the ground. It may be that, from their low ca- pacity, and their want of education and general intelligence, they are incapable of anything better. If so, the fact only strengthens our argument ; wherever the capacity exists, if it be not developed, if a field of employment be not offered to it, the same results must follow. Manufactures and commerce, on the other hand, requir- ing a great division of labor, and also that the participators in the work should be near each other, necessarily create a civic popula- tion. They will flourish only in cities and towns, and they are the only means of creating cities and towns. This principle, perhaps sufficiently obvious in itself, is striking- ly illustrated by the differences among the States of this Union. Our Southern and Southwestern States are almost exclusively agricultural ; and south of the northern boundary of Virginia and Kentucky, there is but one city, New Orleans, of the first class, numbering over 160,000 inhabitants, and but three cities of the second class, Richmond, Charleston, and Louisville, each number- ing over 35,000. These cities, of course, have sprung up from the same causes which sustain Dantzic and Odessa; — they afford an outlet for the surplus produce of the vast agricultural districts which depend upon them ; manufactures have hardly contributed at all to their growth. If we reckon as civic population those only who dwell in cities or towns having at least 12,000 inhabitants each, Massachusetts and Rhode Island, two manufacturing States, with an aggregate population of only 1,405,686, have nearly as large a civic population as these ten agricultural States, who num- ber in the aggregate about ten millions. The cities in Massachu- setts and Rhode Island have been created almost entirely by manufacturing enterprise, these States not having any surplus agricultural produce. .They are the two most densely populated States in the Union. Wherever there is a considerable fall of water, affording power to move machinery, there a new city springs up, though the soil in the neighborhood should be as barren as the Desert of Sahara. But, under the demand for agricultural produce created by that city, the dry sand and the hard rock are THE CONCENTEATION OF THE PEOPLE. 79 converted into gardens of fruit and vegetables ; while the plain of Eastern Virginia, once almost unsurpassed for fertility, its powers being now exhausted, is relapsing in part into its primitive wild condition. Cities and towns are the great agents and tokens of the increase of national opulence and the progress of civilization. The revival of effective industry, which preceded, and in part caused, the revi- val of learning in Europe, took place through the agency of the free towns and great trading-cities, which sprang up most numer- ously in Germany and Italy, where they afforded a refuge for the arts and the pursuits of peace. Their establishment was the first effective blow given to the feudal institutions of the Continent. Commerce and manufactures, to which their walls afforded protec- tion against the chances of war and the rapacity of the warlike no- bles, " gradually introduced order and good government, and with them the liberty and security of individuals, among the inhabitants of the country, who had before lived almost in a continual state of war with their neighbors, and of servile dependency upon their su- periors. By affording a great and ready market for the rude pro- duce of the country, they gave encouragement to its cultivation and further improvement." The word civilization itself, as if to indicate the origin and home of the thing, is derived from civis, the inhabitant of a city. Sismondi attributes the greater humanizing and civilizing influence of the colonies of the ancients over those of the moderns to the fact that the former founded cities, while the latter spread themselves over much land. In the town, man is in the presence of man, — not in solitude, abandoned to himself and his passions. The history of the colonization of the borders of the Mediterranean, he says, might also be called the history of the civ- ilization of the human race. The Egyptians, the Phoenicians, the Greeks, and the Eomans successively formed colonies upon the same general plan. Each of these nations became in succession the leaders, the masters, of the civilized world in refinement, learning, and the arts ; and the colo- nies which they established were the means of diffusing these bless/ ings among the rude tribes within whose territories the new settle- ments were formed. When the mother country became too popu lous, when the inhabitants of its wall-enclosed cities became strait- ened for room, detachments of them were sent out to found ne^i 80 THE ENCOURAGEMENT OF MANUFACTURES : homes for themselves on the coasts of other lands. The colony was to take care of itself, to be independent of the mother country, from the outset. Hence, to protect themselves against the savage tribes among whom they came to dwell, they were obliged, as the first step, to build a city and encircle it with fortifications. With- in its walls they all slept.; and they did not wander so far from its precincts during the daytime, but that they could at anyhour hear the trumpet-call, which, like the alarm-bell of modern times, might summon them back to the defence of the walls. Hence they culti- vated only a narrow territory, lying within sight of, or at a short distance from, the city ; and to obtain food from this restricted space for their whole number, they were obliged to exhaust all the arts of cultivation upon it : it was tilled, and it bloomed, like a garden. For greater security, a portion of it was generally en- closed within the fortifications. This pomoerium, or cultivated space under the walls, was usually divided into small strips, and allotted to the several heads of families among the citizens. A portion of the colonists devoted themselves to tillage, and raised food enough, or nearly enough, for the whole city. A larger por- tion within the walls applied themselves to the mechanic arts and to commerce, exchanging their manufactured goods for food, either with their own agricultural citizens, or with the native inhabitants of the soil, when they could open peaceful intercourse with them, or with the denizens of other shores, perhaps of the mother coun- try, to which they sent their ships. As they needed only a narrow strip of territory, which they often obtained by fair purchase from the aborigines, the hostility of the latter was not excited ; and the mutual benefits of trade being soon felt, the natives came to regard the colonists as their benefactors and best friends. A knowledge of the arts, a taste for the comforts and luxuries of life, learning and religion, were thus diffused among them ; and in their simplicity and gratitude, they often reverenced the authors of their civilization as superhuman beings, and paid them divine honors. Many, if not most, of the • gods and goddesses of ancient mythology were originally only the founders of art-bringing, knowledge-and-religion-diffusing colo- nies, whose beneficent influence, handed down to grateful remem- brance by tradition, really seemed to admiring posterity divine. The colony, the city, was opulent and refined from the beginning ; THE CONCENTRATION OF THE PEOPLE. 81 founded by the most enterprising citizens of the mother country, who brought their wealth, their cultivated tastes, and their indus- trious and adventurous habits along with them, it became almost at once a rival of the parent city in learning, industry and the arts. Temples and theatres were built ; the drama flourished ; schools of eloquence were established ; manufactures of costly aud elegant fabrics were begun ; and commerce started into life with all the vigor of youth and the large resources of manhood. Brief as this sketch is, the classical reader will recognize in it, I think, the principal features of those colonies which the Phoeni- cians established along the northern shore of Africa, the Greeks along the coasts of Asia Minor, Sicily, and Magna Grseeia or Southern Italy, and the Romans in Gaul and Spain.* Carthage, the great commercial and manufacturing city of ancient times, the rival of Rome, may be taken in its history as a type of them all ; and in the fanciful picture which, many years after its destruction, the Roman poet drew of its supposed origin, of the scene which it presented while the walls of the city were building, we recognize what was the idea, even so late as Virgil's time, of the mode of founding a colony. Modern colonies, on the other hand, are, from the outset, de- pendencies of the mother country, to which they constantly look for protection and support. They are often planted by those who * " Their progress," says Mr. Grote, speaking of the Grecian colonies in Sicily, " was very great, and appears greater from heing concentrated, as it was, in and around a few cities. Individual spreading and separation of residence were rare, nor did they consist either with the security or the social feelings of a Grecian colonist. The city to which he belonged was the central -point of his existence, where the produce which he raised was brought home to be stored or sold, and where alone his active life, political, domestic, religious, recreative, etc., was car- ried on. There were dispersed throughout the territory of the city small fortified places and garrisons, serving as temporary protection to the cultivators in case of sudden inroad; but there was no permanent residence for the free citizen except the town itself. This was, perhaps, even more the case in a colonial settlement where everything began and spread from one central point, than in Attica, where the separate villages had once nourished a population politically independent. It was in the town, therefore, that the aggregate increase of the colony palpably con- centrated itself, — property as well as population, — private comfort and luxury not less than public force and grandeur. Such growth and improvement was of course sustained by the cultivation of the territory, but the evidences of it were manifested in the town; and the large population which we shall have occasion to notice as belonging to Agrigentum, Sybaris, and other cities, will illustrate this position." (Vol. III. p. 368. Am. ed.) 6 82 THE ENCOURAGEMENT OF MANUFACTUKES : do not intend to reside there permanently, but simply wish to gather again in a new country the wealth which they have dissi- pated in an old one, and then to return to their former home in order to enjoy it. Thus, relieved frdtn all fear of attack from the aborigines, their first care is to get possession of as much land as possible, this being the most obvious and plentiful source of riches. Individuals or joint-stock companies obtain grants of land measured by the league ; and their rapacity provokes the vengeance of the natives, at the sa^me time that it leads to their own isolation and defencelessness. The territory which they acquire is out of all proportion to their wants, their physical strength, or their capital ; they cultivate only here and there a very fertile spot, where the powers of' the soil are soon spent by a succession of exhausting crops ; and in the careless style of agri- culture to which they become accustomed, through their depend- ence on the extent and natural richness of their land, is soon lost all remembrance of the agricultural art and science which they brought with them from their old home. Widely separated from each other, amply supplied with food by the bounty of nature, but destitute of the manufactured articles on which depend the com- forts and even the decencies of life, out of the reach of the law, and beyond the sphere of education, they rapidly approximate the condition of the savages whom they have just dispossessed. They become "squatters," "bushmen," "backwoodsmen," whose only enjoyments are hunting and intoxication, whose only school-room is the forest, and whose sense of justice is manifested only in the processes of Lynch-law. They are doomed to the solitary, violent, brutal existence which destroys all true civilization, all sympathy with other men, though it increases strength of body, adroitness, courage, and the spirit of adventure. The want of local attach- ments, and an insatiable thirst for wandering and adventure, are, I fear, the most striking traits in the character of the whole popu- lation of our Mississippi valley. The truant disposition which carried them over the Alleghanies hurries them onward to the Eocky Mountains. I do not fear that these constant migrations should lead our countrymen back to barbarism ; but it is certain that the " pioneers of civilization," as they have been fondly called, leave laws, education, and the arts, all the essential elements of civilization, behind them. They may be the means of partially THE CONCENTRATION OF THE* PEOPLE. 83 civilizing others, but they are in great danger of brutalizing them- selves. * Strangely enough, the only colony of modern times founded on the principles which governed the ancients in the establishment of their colonies is one commenced by a set of half-crazed fanatics in our own far-distant territory of Utah. Here, as well as at their former place of settlement in Illinois, the Mormons appear to have begun their colony by founding a city, within or near which their whole population is to be Collected, so that the mechanic arts and all branches of manufacture may be established at the same time that they make their first attempts in agriculture. The name of their present chief city is New Hierusalem, situated on the right bank of the Western Jordan, which empties into their Dead Sea. " Its houses are spread," says Mr. Kane, " to command as much as possible the farms, which are laid out in wards or cantons, with a common fence to each ward. The farms in wheat already cover a space greater than the District of Columbia, over all of which they have completed the canals and other arrangements for boun- tiful irrigation, after the manner of the cultivators of the East. The houses are distributed over an area nearly as large as the city of New York. They will soon have completed a large com- mon storehouse and granary, and a great-sized public bath-house. One of the many wonderful thermal springs of the valley, a white sulphur-water of the temperature of 102° Fahrenheit, with a head of ' the thickness of a man's body,' they have already brought into the town for this purpose.'' It is remarkable, that one of the latest improvements or dis- coveries in economical science, Mr. Wakefield's theory of coloniza- tion, consists in the recognition of the fact that the ancient mode of -planting colonies is far preferable to the modern one. Mr. Wakefield perceived that a country cannot have a profitable agriculture unless it has a large town population, who may supply the agriculturists with manufact\ired articles, while the agricul- turists supply them with food. Both parties are thus furnished with a market for their surplus produce, and with the articles that they most need in exchange for it. He showed that the modern fashion of establishing new settlements, — " setting down a number of families side by side, each on its own piece of land, 84 THE ENCOUKAGEMENT OF MANUFACTURES : and all employing themselves in exactly the same manner, — though, under favorable circumstances, it may 1 assure to those families a rude atmndance of mere necessaries, can never be other than unfavorable to great production or rapid growth." The situation of Oregon hardly ten years ago affords a striking illus- tration of this truth : the settlers, for want of a market, were obliged to feed their horses with the finest wheat, while their own dwellings were nearly destitute of all the comforts of life. Wake- field's " system consists of arrangements for securing that every col- ony shall have, from the first, a town population bearing due pro- portion to its agricultural, and that the cultivators of the soil shall not be so widely scattered as to be deprived by distance of the benefit of that town population as a market for their produce.'' When land was plenty and free immigrants scarce in New Hol- land, the government found it convenient to make liberal gifts of territory; and accordingly, tracts varying in size from 10,000 to 50,000 acres were granted to various individuals. Mr. Wakefield, says one of his reviewers, argued thus : " The welfare of any community depends very much upon such a division of labor as shall fill every trade, profession, and employment with good men, and not overload any of them. If land in any country is so cheap that all are able to become landholders, there will be no laborers, no farm-hands, or mechanics ; a semi-barbarism will fol- low ; no growth in wealth or civilization will take place, and the country will be stationary or retrograde. If, therefore, you. would have a colony progressive and civilized, you must put your lands so high as to keep a proper proportion of the inhabitants in the labor-market seeking employment, and yet not so high as to pre- vent as many from buying real estate as can use it to advantage with the help of such laborers. If, then, England wishes Australia to grow in riches and goodness, let her sell the lands at a fixed price, never taking less, and in fixed quantities, never selling less ; and let her apply the revenue arising from these sales to the trans- portation of free, honest laborers to the points where they are need- ed. In this way, the labor market of New Holland will be sup- plied ; the expense of supplying working hands will be paid by the lands of the colony ; no more land will be taken up than can be worked to advantage; population will be concentrated; wealth will accumulate, and knowledge and virtue advance." DISPOSAL OF THE PUBLIC LANDS. 85 Mr. Wakefield's theory was good, but a practical difficulty ob- structed its application. The government, adopting his views, put their lands up to a high price ; and the immigrants, consequently, instead of purchasing them, or of remaining as laborers on the lands purchased by others, pushed farther into the interior, and " squatted" on the best land they could find, without paying any- thing. In those vast unsettled regions, they knew very well that they were out of reach of the sheriff. Thus, the very measures adopted for concentrating them, and keeping them within the ■ range of civilization and law, led to their wider dispersion and utter lawlessness. It is curio'us that the United States system of disposing of the public lands, adopted in all its essential features as far back as 1800, has worked better than any other plan which has yet been devised. The land is carefully divided by the government surveys into townships six miles square, each of these being subdivided into thirty-six sections, of one square mile, or 640 acres, each. All is held at a minimum price of $ 1.25 an acre ; and the sales are made at public auction, as rapidly as the progress of the population seems to require. Lands which will not bring f 1.25 an acre at the public sale are still held by the government subject to entry at any future time, at private sale and at the minimum price. Any person can select a quarter, or even, an eighth section, — 160 or 80 acres, — wherever he can find one surveyed and not yet sold, and, by making a record of his intention to occupy and settle it himself, he can secure what is called the "pre-emption right " ; — - that is,_ a privilege of purchasing that land at the minimum price of $ 1.25 an acre, whenever the government shall think proper to sell it, which it will do when the settlement is so far advanced as to render it probable that most of the land in the vicinity will bring that price. Thus the actual settler in truth obtains his land on credit, though all actual sales are for cash. He has credit till the actual sale is ordered ; and some years may intervene, dur- ing which he may proceed to clear and cultivate his land, and actually obtain enough from it to make up its price, — secure that no one will overbid him, and that he cannot be obliged to pay more than $ 1.25 an acre for it, however great may be his improve- ments. Five per cent is reserved from the proceeds of the sales, to be expended, three fifths for making roads in the newly settled 8G THE ENCOUKAGEMENT OF MANUFACTURES : territory, and two fifths for the support of schools and colleges therein. In still another way the sale of the public lands is made to help in opening new means of communication between the different por- tions of recently settled territory, and in giving the people access to distant markets. By special statutes, companies constructing new railroads often receive a free gift of one half of the sections of land, taken alternately, that border upon the line of the proposed road ; and as these sections command a much enhanced price on account of their nearness to the new artery of travel and traffic, the sale of them usually defrays in great part the cost of build- ing the railroad. At the same time, this gift costs the" government nothing, for the price of the alternate sections which are reserved is then doubled, and they are quickly sold at this advanced rate, for the new road has more than doubled their value. I say this system has worked well, the only evil experienced under it being, that speculators will sometimes buy up large tracts not subject to pre-emption right, at the minimum government price, and hold them for an indefinite period, hoping that, as the population gradually closes up and concentrates around them, they may again be brought into market at a much advanced price. While thus held, they remain unoccupied, — broad patches of wil- derness among the settlements, — obstructing communication be- tween the surrounding lands, and barring out occupation and im- provement. But there is a check to this evil in the fact that such lands are subject to State taxation, though they are tax-free before they are sold by the United States ; and the taxes being propor- tioned to the rise in value of the property, it is not for the interest of the speculators to retain the land a long time. But the inhabitants of the Western States make a great mis- take when they clamor for a reduction of the minimum price at whichthe public lands are now held, and even demand that they shall be offered, in limited quantities, as a free gift to actual set- tlers. Their object, of course, in making these demands, is to stimulate the spirit of emigration to the West, so that the popula- tion there may more speedily become dense, and the value of the lands already settled thus be enhanced. The object is a good one ; but if there is any force in the considerations now adduced, the means adopted will rather check than promote its attainment,' It DISPOSAL OF THE PUBLIC LANDS. 87 is surely not for the interest of sparsely settled States, like In- diana, Illinois, and Michigan, that the great wave of emigration, though broadened and deepened, should only roll over them, to be arrested at last by the farthest limits of Iowa and Minnesota, or perhaps to pass much farther. Any great reduction in the price of the public lands will surely have this effect. The' most eligible land in the three States first mentioned has already been taken up by individuals, that portion which yet remains in the hands of government being either less fertile, or more distant from naviga- ble streams and other means of communicatipn, or situated in a less salubrious or convenient region, than the tracts first selected for purchase. They have long been in the market, and have not yet found a buyer. Even now, most of the emigrants pass by them, seeking public lands which are more remote from their former, homes. Any general reduction of the government price could not affect this relative eligibility of the nearer and more distant lands. Reduce the price to nothing, ■ — give away the lands altogether, — • and the emigrant will still pass on, pushed forward by his fond illusion, that the farther from home, the nearer to El Dorado. Again, what is most needed for an increase of the prosperity of the West — of that portion of it, at least, which lies near the Mississippi — is, not that the lands yet in the possession of gov- ernment should become private property, but that the population should be concentrated on the tracts already o*wned by individuals, though in great part still covered by the primeval forest. To en- hance the value of these broad regions, the people must be massed together, towns and cities must be established, manufacturing and commercial industry must be added to agricultural, and the hut of the backwoodsman give place to the well-furnished abode of civilized man. It is an ill mode of enhancing the value of the farms of individuals, to offer lands in their immediate vicinity at a nominal price, or at no price at all. The passion for owning land, which converts nearly all the new settlers in our Western States into farmers, however, ill-fitted for such occupation by their pre- vious pursuits, is as injurious to agriculture as to the other great branches of industry. The land is held by those who, from defect of experience or want of capital, are unable to develop its resources, or even to remove the forest from a tithe of their do- mains. Corn, fuel, and meat are abundant, because prodigal na- 88 THE ENCOURAGEMENT OF MANUFACTURES : ture affords so many facilities for the production of them, that the skill, enterprise, and knowledge of the cultivator are little needed, and are therefore imperfectly called forth. But man does not live by bread alone ; and when this alone is supplied, almost without labor and without stint, he learns to do without many of the requi- sites even of a low stage of civilization, and allows the wants of his higher nature to remain unsatisfied. The want of a market, and the consequent surplus of agricultural produce, reduce its price so low that many families find it useless to raise more than is wanted for their own consumption. Again, the agriculturist has usually but one or two staple arti- cles — perhaps wheat alone, or cotton alone, or hemp alone — which he can send to a distance and sell to foreigners. These alone are capable of transportation to a distance. But his farm canuot usually be worked to advantage unless he has a market in his immediate neighborhood, at which he can dispose of his green crops, market vegetables, butcher's-meat, and other articles, which must be sold on the spot, or not at all. He needs this neighbor- ing market, also in order that he may purchase conveniently, and at the lowest price, his ploughs, spades, carts, and other farpiing- tools. How is he benefited, then, — though we were to grant that he could exchange his wheat for cloth to better advantage by trading with foreigners than with his own countrymen, if he should thereby prevent a manufacturing market town from springing up within a few miles of his farm, and thus altogether lose the sale of many of his products, and be compelled to purchase his tools at a much higher price, or be put to great inconvenience in obtaining them on any terms 1 The difficulty is felt, though its true cause is not ascertained ; and a general call is made for improving the means of communi- cation, so as to give access to distant markets, when the real want is that of a market near home. The State too often bankrupts itself in the gigantic enterprise of creating a system of railroads and canals, so as to gain access to a manufacturing and commer- cial population on the other side of the Alleghanies., instead of laboring to create such a population within its own territory. Indiana and Illinois, whose united territory measures about ninety thousand square miles, and whose inhabitants, in 1860, numbered over three millions, had but one city — Chicago — which contained THE CONCENTRATION OF THE PEOPLE. 89 over one hundred thousand inhabitants, and but three others — ■ Indianapolis, Peoria, and Quincy — having more than twelve thou- sand. Has it been a benefit, to these States, that the cheapness of the public lands has recently borne the tide of emigration on- ward into Kansas and Nebraska, instead of its being arrested by the left bank of the Mississippi 1 In our opinion, the interests of these States, and of the emigrants themselves, would be most ef- fectually promoted by raising the price of the public lands to a point which would really keep them out of the market for twenty years to come. It is remarked by an intelligent English traveller, that "the wheat-exporting regions of North America have been gradually shifting their locality, and retiring inland and towards the West." During the middle and latter part of the last century, the banks of the Hudson and the Delaware, and the flats of the lower St. Lawrence,! were the granary of America ; the western part of New York, especially the Genesee country, succeeded these ; then came Ohio and Canada West ; and now, a large portion of the sur- plus wheat, destined for exportation to Europe, is drawn from Michigan, Wisconsin, Iowa, and Minnesota. The reasons for this change are to be found, partly in the migratory disposition of the people, and partly in their imperfect and exhausting processes of agriculture. The influx of population into the neighborhood causes the lands to rise so rapidly in value, that the deterioration of the soil, under too constant and exhausting crops, becomes com- paratively of little moment. Little attention is therefore paid to manuring, or to establishing a due rotation of crops. Only the cheapest system of husbandry, and that productive of the quickest returns, without regard to the effects produced by such tillage in the long run upon the inherent fertility of the ground, can enable the farmer to maintain competition in the market with the sup- plies poured in from the newly opened wheat-regions farther west, where the land has been obtained at a nominal price, and its virgin powers seem inexhaustible. Tired of a contest in which he is subject to a constantly increas- ing disadvantage, the New York farmer at last sells his farm, and himself migrates westward, secure of obtaining a larger and more fertile tract of land at a low cost. But in Kansas or Nebraska, he soon finds that he has only bartered one disadvantage for many. 90 THE DESIRE OF ACCUMULATION : The cost of transporting his wheat to market is now so great that the price on the ground hardly pays the expenses of cultivation. Labor is dear, and difficult to be had at any price, as few will work for wages when ttyey can obtain farms 'for themselves at a nominal price and on long credit. The emigrants of a later day, instead of settling down and completing the half-formed village, push on and begin rival settlements farther still in the interior. Then competition begins anew, and the old contest with les- sening prices and increasing expenses of cultivation must be renewed. The great evil in the Old World, especially among commercial and manufacturing nations, arises from the undue concentration of the people in cities, the improvements in the implements and pro- cesses of agriculture requiring every year a smaller and smaller number of laborers for the tillage of the fields. In Western Amer- ica, the difficulty is of just the opposite character ; the population is thinly dispersed,' cities are found only at great distances from each other, and the processes of agriculture, as well as of most of the arts of life, tend to deterioration rather than improvement. CHAPTER VI. THE INCREASE OF CAPITAL AS AFFECTED BY THE ADVANTAGES HELD OUT TO THE POSSESSORS OF WEALTH : INJURIOUS EFFECTS OF CASTE, OR THE FIXITY OF RANKS AND CLASSES. The next stimulus of labor and frugality which we have to con- sider is, the prospect that the savings when made, or the capital when accumulated, will be attended with a high rate of profit, and by a large proportion of physical comfort, social consideration, and political influence. Necessity is the first and most effective spur to exertion. We have wants that must be satisfied : we must eat and drink, or we perish. But observe that labor or exertion tends only to the pro- duction of wealth, and that our natural desires urge us to consume the product just as soon as it is created. For the accumulation of capital, or the growth of national opulence, we must be willing, not CAUSES OF IMPROVIDENCE. 91 only to work, but to save. Now, the greatest of all encourage- ments to frugality is the sure prospect that our savings will con- tribute largely to our comfort, will elevate our position in society, and add to the estimation in which we are held in the community and to the power which we actually wield. No man will practise self-denial for nothing ; take away the chance of using his accumu- lations to advantage, and every one, to use the popular phrase, will spend as he goes. It is not enough to prove to the laborer that what he does not spend to-day he will be able to spend to-morrow. There is some hazard, at least, that he may lose it before the mor- row comes ; and if an equal amount of enjoyment can be had with it now, he will be apt to secure that enjoyment as soon as possible. But when he sees that the enjoyment, if postponed, may be con- siderably increased, he will be anxious to save ; and this anxiety will be greater in proportion to the probable rate of increase, and to the comforts and immunities which the use of the accumulation may bring. The greater the consideration and influence which at- tend the possession of wealth, the greater will be the temptation to amass wealth. What has been called " the effective desire of accumulation," says Mr. Mill, " is of unequal strength, not only according to the varieties of individual character, but to the general state of society and civilization.'' " All circumstances, which increase the proba- bility of the provision we make for futurity being enjoyed by our- selves or others, tend to give strength to the effective desire of accumulation. Thus, a healthy climate or occupation, by increas- ing the probability of life, has a tendency to add to this desire. When engaged in safe occupations, and living in healthy countries, men are much more apt to be frugal, than in unhealthy or hazard- ous occupations, and in climates pernicious to human life. Sailors and soldiers are prodigals. In the West Indies, New Orleans, the East Indies, the expenditure of the inhabitants is profuse. War and pestilence have always waste and luxury among the evils that follow in their train." Improvidence may also proceed from intellectual as well as moral causes. " Individuals and communities of a very low state of intelligence," says Mr. Mill, " are always improvident. A cer- tain measure of intellectual development seems necessary to enable absent things, and especially things future, to act with any force 92 THE DESIRE OF ACCUMULATION: on the imagination and will The effect of want of interest in others in diminishing accumulation will be admitted, if we con- sider how much saving at present takes place which has for its object the interest of others rather than of ourselves ; — the education of children, their advancement in life, the future in- terests of other personal connections, the desire of promoting, by the bestowal of money or time, objects of public or private usefulness. If mankind generally were in the state of mind to which some approach was seen in the declining period of the Ro- man empire, — caring nothing for their heirs, as well as nothing for their friends, the public, or any object which survived them, — they would seldom deny themselves any indulgence for the sake of saving, beyond what was necessary for their own future years ; which they would place in life annuities, or some other form which would make its existence and their lives terminate together." The various stages of civilization depend upon, or are the con- sequence of, the varying strength of this desire of accumulation. The remnants of Indian tribes which are found in villages upon the banks of the lower St. Lawrence are surrounded by circum- stances which ought to secure to them all the comforts of life, and which would enable others to amass wealth. They have abun- dance of fertile land, already cleared from the forest, and manure in heaps lies beside their huts. Yet such are their apathy and improvidence that they often suffer extreme want ; and from the privations thus endured, with occasional intemperance, their num- ber is rapidly diminishing. Yet their apathy does not arise from aversion to labor ; for they are industrious enough when the reward of toil is immediate. They are successful in hunting and fishing, and they work with ardor when employed as boatmen on the St. Lawrence. They will even till the ground, if the returns from such labor are speedy and large ; they will raise Indian corn, which grows and ripens quickly in Canada, and yields perhaps a hundred-fold. But they have not foresight enough to fence their fields, and hence, when the situation is exposed to the incursions of cattle, the culture is abandoned. Nearly as low, in respect to foresight and prudence, are the emancipated negroes of Hayti and the British West Indies. In a tropical climate, where little clothing or shelter is needed, and CAUSES OF IMPROVIDENCE. 93 where the ground is so fertile that the labor of a few weeks will supply sustenance for a year, they are content to gain little more than the necessaries of a merely animal existence. The ease with which life is supported fosters indolence, feebleness, gayety, and insouciance ; and even when the people pretend to labor, their work is scarcely worth paying for. " In the sugar-mills," we are told, " from twenty to thirty men and women are employed to do what five American operatives would do much better in the same time with the aid of such labor-saving agencies as would suggest them- selves at once to an intelligent mind " ; and " this is but one of the thousand ways in which labor is squandered on this island." The people might supply themselves with all the luxuries of the earth ; but they are content to live in a swinish abundance of the grossest necessaries, — to be fat and shining, and to sing, chatter, and bask in the sun. Again, accumulation is rapid when the rate of profits is large. Tf this rate is so high that the accumulated savings of a few years may be made to produce an income equal to that from which those savings were made, then the prospect of being released altogether from the necessity of labor will stimulate the habit of frugality to the utmost. The average rate of profits in this country is at least twice as large as in Great Britain ; for the interest of money here averages over six per cent, while the English Government funds yield but three per cent, and the ordinary rate for short loans often falls below that point. But the rate of profits on capital consider- ably exceeds the rate of interest on money ; for he who borrows capital undertakes the risk and care of employing it to advantage; and, of course, he who lends his capital, because unwilling to take that risk and care on himself, will not expect so high a rate for it as he might obtain by using it himself. When a great deal can be made by the use of money, a great deal will be given for the use of it ; but still not so much but that something shall remain to com- pensate one for the skill and industry that are required to use it to advantage. The average rate of profits in this country may be es- timated at twelve per cent a year, while the corresponding rate in England is but six per cent. In this country, then, by postponing the period of consumption or enjoyment for a little over six years, the amount of that enjoyment may be doubled. In England, in or- der to double the enjoyment, abstinence must be practised for twelve 94 THE DESIRE OF ACCUMULATION : years. It is obvious, then, that where there is the most need of capital, the temptation to accumulate it is strongest, — the rate of profits being high, — and its growth is most rapid. In Holland, nearly two centuries ago, after a period of almost unequalled commercial prosperity, the rate of interest fell to about two per cent, the rate of profits suffered a corresponding reduction, and, as a necessary consequence, the growth of capital almost wholly ceased. Holland, in point of commercial and manufacturing enterprise, has been in a stationary, if not a declining state, for about two centuries. The springs of industry are not relaxed, for the people are still sober and laborious ; but they lack the energy and the thirst for gain, which caused them, in the seventeenth cen- tury, to dot the surface of the globe all over with Dutch colonies Few will practise abstinence and try to amass wealth, when the rate of profit is but little over four per cent. The rate of interest in England, in Henry VIII. 's time, was limited to ten per cent, which implies that it had been higher. Under James I. it was reduced to eight, and after the Restoration of the Stuarts, to six per cent. Forty years afterwards, it was again reduced to five, and a continuance of the same causes, as we have seen, has now brought it down to three per cent. But for the enlarged intercourse with foreign lands, which has tempted Eng- lish capitalists of late years to embark their funds in enterprises abroad, — in Mexican mines, in Continental and American railroads, in Austrian and Russian funds, and in United States stocks, — it is probable that the interest of money and the profits of stock would, ere now, have sunk to that low point at which the desire to accu- mulate ceases altogether. True, " there would be adequate motives for a certain amount of saving," as Mr. Mill remarks, " even if capital yielded no profit. There would be an inducement to lay by in good times a provision for bad ; to reserve something for sickness and infirmity, or as a means of leisure and independence in the latter part of life, or a help to children in the outset of it. Savings, however, which have only these ends in view have not much tendency to increase the amount of capital already in existence. These motives only prompt each person to save at one period of life what he purposes to con- sume at another, or what will be consumed by his children before they can completely provide for themselves." " There are always THE AGGEEGATION OF SMALL SAVINGS. 95 some persons in whom the effective desire of accumulation is above the average, and to whom less than the ordinary minimum rate of profit is a sufficient inducement to save ; but these merely step into the place of others whose taste for expense and' indulgence is beyond the average, and who, instead of saving, perhaps even dis- sipate what they have received." The hope of elevating one's condition in the world tends more effectually to increase the national wealth in proportion as it affects a larger number of the people. In most civilized countries, the bulk of the population are poor, their daily wages hardly suf- ficing to buy their daily bread. Their savings, if it is possible for them to make any, must be in very small sums ; and the induce- ment for them to be frugal must depend on the possibility of immediately investing such small sums to advantage. One of the great improvements of modern civilization consists in the means afforded, the machinery contrived, for collecting these driblets of wealth, and bringing them together into large reservoirs, whence they issue in abundant streams, giving efficiency and fertility to labor throughout the land. The water which falls in drops upon the desert sinks through the sand, and leaves the ground arid and barren as before ; but when collected in great tanks and cisterns it turns some portion of that desert into a garden. A century or two ago, if the laboring part of the population made any sav- ings, they were in the form of little hoards of silver or gold, hid in an old stocking, or buried in the garden. But because the money thus stored was unproductive, and yielded no interest, and because it was always at hand when the owner was for a moment tempted to some indulgence and consequent expense, the number and amount of such hoards were always small. Now, through the multiplication of the branches of retail trade and the lesser me- chanic arts, and through joint-stock corporations and savings' banks, the first half-eagle which the laboring man or woman saves from the month's wages is profitably invested, and, by the end of the year, is increased by the twentieth part of itself. When this saving has reached a very moderate amount, it can be made to accumulate at compound interest, and thus to double itself in twelve years. In many cases, it soon comes to be used by the owner himself as capital ; that is, it is invested in the purchase of tools or machinery, or a small stock in trade; and it may then 96 THE DESIRE OF ACCUMULATION. accumulate at the rate of ten or twelve per cent a year, — that is, it may double itself every six or seven years. The result is, that he who began life as a common laborer often drives about in his own carriage before its close. In almost any other part of the world than New England, I should be afraid to give this sketch as an illustration of the manner in which the wealth or available capital of a nation is increased. But I presume it is a safe assertion, that at least one half of those who are usually called -wealthy men, in Boston and its neighborhood, have obtained their wealth very nearly in the man- ner, or through the process, just described. This leads us to perceive that the aggregate of the small savings made by the bulk of the population, who have very small means, may constitute, and in this country actually does constitute, a larger annual addi- tion to the whole amount of national capital, than the sum of the much larger savings made by the few who are usually considered as capitalists. The customs of society in England require the style and expensiveness of living to come much nearer to the indi- vidual's whole income than is usual in this country, so that most of the nobility and the landed gentry, who have the largest in- comes, do not make any savings at all, and many even run in debt, or encroach upon their capital. A nobleman who inherits an estate of £ 20,000 a year, inherits also a style of living which is costly enough to consume it. In the United States, on the other hand, a man usually begins poor, and therefore with frugal habits, and consequently hardly knows what to do with the income of a large property when he has acquired it. He has no ancestral castle to maintain in due state, and no county to contest at each succeeding election. Nay, the custom of the country, the force of public opinion, is such, that he cannot make his personal expen- diture equal to his income, even if he wished. He must not keep a carriage and four, nor have a footman to stand behind his more modest equipage, nor clothe his servants in livery, nor adopt many others of the badges by which some persons try to convince the world that they are people of consequence. We are accused of being fond of titles, it is true ; but the epithets of Major, Colonel, and Honorable cost nothing but civility, and so do not help a man to spend his fortune. We do not tolerate gold lace, nor cocked hats, nor tall footmen with gold-headed canes. ADVANTAGES OF THE POSSESSION OF WEALTH. 97 We come now to the inquiry, Under what circumstances are the middle and lower classes able to save, and by what means is their inclination to frugality most effectually stimulated? I answer, that the most powerful means to this end is what may be called the mobility of society, or the ease and frequency with which the members of it change their respective social positions. The worst of all forms of civil polity is that which binds a man forever to the condition of life in which he was born, be it of high or low degree, however he may have merited removal from it by his character, acquisitions, and behavior. Fixity of ranks and classes, or the existence of immunities and distinctions which money and talent can neither procure nor remove, is a bar to the accumula- tion of wealth, — a bar the difficulty of overleaping which is pro- portioned to the importance and extent of those unpurchasable priv- ileges. If they are numerous and of great moment, if they cover the whole ground both of political influence and social consider- ation, what inducement is there for any one who is not born to the possession of them, either to labor or to save further than is re- quired for the necessities of the present hour? Only after pro- viding for these necessities does the accumulation of capital begin. And what inducement to accumulate is there for one who is born to the possession of them, since he already enjoys more than wealth can buy, and cannot forfeit this enjoyment even if he should lose his wealth 1 The great improvement in the industrial organization of society in modern times, whereby the increase of wealth in all civilized nations has been made so rapid and so great, has been the successive breaking down and removal of these fixed and arbitrary barriers and divisions, so as to leave the whole field of promotion open to the career of skill, industry, and econo- my. A brief notice of a few points in the politico-economical his- tory of different nations will illustrate this statement. " Both in ancient Egypt and Hindostan " — and to a great extent still in the latter of these two countries — " the whole body of the people was divided into different castes or tribes, each of which was confined, from father to son, to a particular employment or class of employmeuts. The son of a priest was necessarily a priest; the son of a soldier, a soldier ; the son of a laborer, a laborer ; the son of a weaver, a weaver, etc. In both countries the caste of the priests held the highest rank, and that of the soldiers the next ; 7 98 INJURIOUS EFFECTS OF CASTE. and in both countries the caste of the farmers and laborers was superior to the castes of the merchants and the manufacturers." Adam Smith adduces these facts to explain why agriculture flourished in those regions far more than any other employment. He might with greater propriety have cited them to explain the peculiar, immovable, statue-like character of Hindoo and Egyptian civilization. The massive granite sphinxes, half covered by the sands of the desert among which they have rested for more than three thousand years, with their enigmatical and almost super- human expression of mingled sweetness and severity, — fit emblems of mystery, unchangeableness, and everlasting repose, — aptly typ- ify the character and the institutions of the people who chiselled them. The bodies of this people are even now drawn from the tombs in which they have lain for thirty centuries, perfect in every limb and lineament, as if they resisted change even after death. And such was their condition during life : the idea of movement, alteration, or progress seems never to have occurred to them. Institutions merely political, the will of a monarch or the de- crees of a senate, could not retain society in this immovable state for ages. The power of religion was brought in, to render sacred the fetters which bound it, and to take away from the minds of the common people any desire to rupture them. How much in- fluence superstition had in building up these divisions of castes, and preserving them from violation or decay, may be conjectured from the fact that the priests always formed the highest caste, and therefore profited most by this peculiar institution. Civilization thus embalmed and immured was safe both from progress and decay by internal causes. It might have remained to this day just as it was in the time of the Pharaohs, if invasion from abroad had not brought it to a violent death, — if the Romans and the Arabs had not successively made Egypt a prey to their thirst for foreign dominion. Though the barriers of caste prevented the people, as indi- viduals, from making any progress in wealth, their peculiar polity enabled the government to undertake and execute works which shame the magnificence and expensiveness of modern productions. What we now esteem the wonders of Egypt, her obelisks and pyramids, her excavations and temples, were strictly public works, performed at royal or priestly command by the multitude, who INJURIOUS EFFECTS OF CASTE. 9D worked without pay, because labor was the function of their caste, and the part which they believed the gods designed to be their vocation. Wages and profits were words which in their ears had no meaning ; all their time, all their labor, was due to the state, which was represented by the monarch and the priests. A portion of their time or of the products of their labor was granted back to them, which might, or might not, suffice for their subsistence. If savings were ever made, it was only with the intention of obtain- ing enlarged enjoyment from them at a future day, never for the purpose of aiding the individual's subsequent labors with a reserved fund, or of purchasing an easier or more elevated position with them. In the station of life in which each person was born, in that he was content to die. Of course, there was no accumulation of private wealth. Even the land belonged to the sovereign ; all that was due to any person was a livelihood in the profession or caste to which he belonged, with that measure and kind of employ- ment and comfort, of luxury or privation, which was allotted to every other member of the same caste. Immobility was the great characteristic of Hindoo and Egyptian civilization. The freer spirit and quicker intellect of the Greeks, the pride and military ambition of the Romans, prevented these nations from sinking into apathy, or stagnating in castes. In the fierce democracy of Athens, the subtle politician and fluent declaimer often elbowed his way into the favor of his fellow-citizens, and consequently into offices of honor and profit. At Rome, a man of plebeian origin not unfrequently vanquished the pride of the patri- cians, and obtained the consulship, or the command of the armies of the republic. There was freedom, there was life, in a society thus constituted. There was a path open to effort, ^nd, a motive for the exercise of industry and self-denial, 'in the turbulent times which preceded and accompanied the fall of ^he republic, individuals often amassed large fortunes, and with these pur- chased the honors which they had not political sagacity, or mili- tary skill and courage, enough to obtain f by mdre honorable' means. One of the triumvirs who shared the 6npire of ^he 'wbrld with Antony and Octavius owed his political pewer'solely to his wealth. Both these nations might have made ffyr greater progress in opu- lence if the institution of slavery, itself ,a caste, had not existed among them, and if the state, and the affairs, of government, had 100 ADVANTAGES OF THE POSSESSION OF WEALTH. not monopolized ambition and effort to so great an extent that private enterprise, and the undertakings of individuals who did not avowedly look to the commonwealth for their reward, were discouraged or held in light esteem. Both at Athens and at Rome, the republic was everything and the individual was noth- ing-; and, as a consequence, in the city proper, society was com- posed of two great castes, — the citizens, who were devoted to public affairs, and the slaves. The wealth of Eome was the wealth of the robber's den, obtained by plundering the rest of mankind. Even the populace of this great city were supported by gratuitous distributions of the corn which was levied as a tribute from the industry of the Sicilians and the Africans; and its patricians amassed their enormous fortunes from the plunder of the provinces which they had been appointed to govern. With regard to slavery among the ancients, it has been acutely remarked by Sismondi, that because it was only an accident of the right of war, and not an industrial organization, it did not discredit labor in general. The slave was not a mere article of property, or a means, through his enforced toil, of increasing his master's wealth. He was rather a token of his owner's, or of the nation's, prowess in war. The possession of numerous slaves was more a matter of pride, a means of ostentation and magnifi- cence, than a mode of investing capital with a view to profitable returns. Few of the slaves were distinguished by color, or any other physical peculiarity, which might serve as an ineffaceable mark of bondage or degradation. Hence, when manumitted, they at once took rank in society, and their children often rose to high honors in the state. As slaves, indeed, they were often put to servile and economical uses ; but they were never treated as mere machines for the production of wealth. They did not perform all the labor, and, therefore they did not discredit labor. They were a caste, and so did not accumulate property, either for themselves or others ; but >they were not a degraded caste ; they were not considered vile, as were the Pariahs in India, or as African slaves are, in modern ( times^ ,' " All the farms," says Varro, " are cultivated by freemen, or by slaves, or by admixture of these two classes. Freemen till the ground, either by themselves, with the aid of their children, as the small proprietors do ; or by free laborers hired by the day, in INJURIOUS EFFECTS OF CASTE. 101 the busy season, when they are making hay or collecting the grapes ; or, finally, by those who are working out the payment of a debt. I speak of all farms in general, as it is more profitable to cultivate the unhealthy districts with hired laborers than with slaves ; and even in the healthy localities, the great labors of the husbandmen, such as the collection of the fruits, the harvest, and the vintage,- ought to be confided to free hired workmen, or mercenaries." Those who belonged to a caste, as the slaves did, and who, consequently, were not stimulated to labor by the hope of rising or the fear of falling in the world, could not be trusted with the most important work, even on a farm. Modern experience fully confirms this re- sult, as no kind of cultivation is found to succeed if conducted by slaves, except that of tropical products, where the laborers can be employed in gangs. After the fall of the Roman empire in the West, and the estab- lishment of various tribes of barbarian conquerors upon its ruins, a great step was taken in social economy by the virtual emancipa* tion of one large class in the community from the fetters of caste. I refer to the inhabitants of the Free Cities or towns, the foundation of which, in Germany, France, and Italy, was the first step towards the creation of the social polity of modern times. Their population, indeed, says Adam Smith, " consisted of a very different order of people from the first inhabitants of the ancient republics of Greece and Italy. They were chiefly tradesmen and mechanics, who seem in those days to have been of servile, or very nearly of servile, con- dition. They seem, indeed, to have been a very poor, mean set of people, who used to travel about with their goods from place to place, and from fair to fair, like the hawkers and pedlers of mod- ern times." They were liable, while thus travelling about, to great exactions ; they were either plundered without mercy by the arrogant and rapacious, or they paid heavy taxes and tolls as a price of protection. "Sometimes the king, sometimes a great lord, would grant to particular traders, especially to such as lived on their own lands, a general exemption from such taxes ; and then, though in other respects nearly servile in their condition, they were called free traders." When thus chartered, they were allowed to give away their own daughters in marriage, their children were permitted to inherit their property, and they could dispose of their effects by will j in 102 ADVANTAGES OF THE POSSESSION OF WEALTH. short, they were released from the most oppressive of the feudal burdens, to which, as of the lower class in society, they had pre- viously been subject. " They were, generally, at the same time erected into a commonalty, or corporation, with the privilege of having magistrates and a town-council of their own, of making by- laws for their own government, of building walls for their defence, and of reducing all their inhabitants to military discipline by obliging them to watch and ward." The nobles despised the burghers, or citizens, whom they regarded as a parcel of emanci- pated slaves, devoted to base mechanic arts, and whose wealth excited their envy and indignation. The king, on the other hand, favored them, as a counterbalance to the power of the nobility, whom they hated and feared ; and the weakest monarchs, conse- quently, were most liberal in their grants of privileges to the cities and towns. Thus the prosperous cities of France and the Low Countries, the famous Hanse towns of Germany, and the flourish- ing commercial republics of Italy and Switzerland came into being. In the country, the distinctions of caste and the consequent limitations of employment still existed. The great barons lived remotely from each other, each on his own estate, surrounded by his retainers and serfs, whose only occupations were war and ag- riculture, and who had no hope of improving their condition. Exposed to every sort of violence, they naturally contented them- selves with a bare subsistence ; for to accumulate more would only excite the rapacity of their oppressors. If one of them did make some small savings, he hoarded them with care and secrecy, till he could find some opportunity of running away to a town, where, if he could conceal himself for a year, he was free forever. Thus a city often grew up to great wealth and splendor, while the country in its neighborhood was in poverty and wretchedness. The great lords themselves could obtain the articles of luxury which they desired only by bartering raw agricultural produce for them, at a great disadvantage, with the inhabitants of the towns. As the wealth and military strength of these municipal corporations in- creased, they could no longer be taxed but by their own consent ; hence they were empowered to send delegates to parliament or the general assembly of the states of the kingdom, where, in connec- tion with the clergy and the nobles, they granted extraordinary/ INJURIOUS EFFECTS OF CASTE. 103 aids to the king, and had a potential voice in managing the affairs of the nation. These cities were not merely republican ; they were essentially democratic, in their origin, their institutions, their social relations, and their tendencies ; and my point is to show that this demo- cratic character was the first cause of their rapid growth in opu- lence. Being originally servile, or nearly servile, in condition, the inhabitants had no distinctions of rank to begin with ; their nat- ural enemies were the nobles, from whose oppressive sway they were but recently emancipated. Trade and manufactures, being their only occupations, were necessarily held in high esteem among them; and he enjoyed their highest confidence and respect who had been most successful in these pursuits. A common interest and common perils bound them very firmly to each other ; and the direction of affairs in their little state was naturally intrusted to those whose skill, prudence, industry, and economy had been already rewarded with the largest accumulations of wealth. No one was ashamed of his craft ; no one had anything to be proud of but his riches. A brewer and a tanner, a weaver and a gold- smith, sat side by side in the town-councils, or led the citizens to the defence of the walls, and even conducted them in armies to the field, where they often defeated the chivalry of France and Germany, and sometimes triumphed over their own monarchs. Van Artevelde of Ghent was a brewer ; the Medici of Florence, though popes and kings were reckoned among their posterity, were at first only successful merchants. Wealth being thus the only passport to distinction, and all the avenues to it being in high re- pute, its possession was eagerly coveted, and the virtues of indus- try and frugality were practised to the farthest extent. With the growth and spread of opulence, and the calling forth of talent from the whole community through the absence of artificial distinctions, the rise and progress of literature and the fine arts were necessa- rily associated. Poetry, painting, sculpture, and architecture had their origin, in modern times, in the commercial republics of Pisa and Florence, and the free cities of Flanders. Wealth passed freely from hand to hand. Feudalism was barred out by the city-walls ; and the father's property, instead of being kept together for the aggrandizement of the family in the person of the oldest son, was distributed equally among the children. If 104 ADVANTAGES OF THE POSSESSION OF WEALTH. one or more of these were prodigal, careless, or indolent, they sank to that level whence the thrift of the father had raised them, and their places were filled by the more capable and industrious. These alternations of fortune, rapid and frequent, kept up in the commu- nity a thirst for gain, and kept down discontent and civil commo- tions. An aristocracy of wealth has this at least to recommend it, if wholly disconnected with an aristocracy of birth, — that by its fluctuations it rather encourages effort than represses it. While society stagnated among the feudal nobility and at the courts of feudal monarchs, it was galvanized into an almost preternatural activity within the precincts of the little civic republics of Italy, Germany, and the Low Countries. The proud nobles were com- pelled to seek aid of the fat and wealthy burghers, the painstaking artisans, whom they affected to despise. • They obtained loans from them, for which they gave their lands in pawn, and even sold to them outright their castles and hereditary estates. Ennobled by the possession of these, the ambition of the citizens grew by what it fed on, and not infrequently, as in the case of the Medici at Flor- ence, they became the ancestors of a line of kings. This sketch of the causes affecting the growth of opulence in an- cient and modern times is introduced principally for the purpose of illustrating the most remarkable difference in the social condition of Great Britain and the United States. The most striking thing in the aspect of American society is the constant strain of the fac- ulties, with all classes, in the pursuit of wealth, • — the restlessness, the feverish anxiety to get on, which English writers, at least, are apt to regard only as " the disagreeable symptoms of one of the phases of industrial progress." In whatever light it ought to be viewed, they are certainly mistaken in attributing it to our favor- able position, with an abundance of fertile land, and with sources of opulence as yet fresh and unexhausted. Were such causes ade- quate to produce this particular effect, we should find society ex- hibiting the same characteristics wherever it is similarly situated, — in British America, for instance, in British Australia, and over a great portion of the South American continent. But it is not so ; and we must therefore look for an explanation of the phenomenon to some cause which is peculiar to our own social state, — to some stimulus acting upon what political economists call " the effective desire of accumulation,'' which has full scope to operate here, while INJURIOUS EFFECTS OF CASTE. 105 it is repressed or much restricted in all other nations, — even in England, where the character of the population in other respects is so similar to our own. I find such a peculiar cause in the evident fact that every in- dividual here has the power to make savings, if he will, and almost as large as he will ; and has the certainty that the savings when made, the wealth when accumulated, will immediately operate, in proportion to their amount, to raise the frugal person's position in life, — to give him, in fact, the only distinction that is recognized among us. Neither theoretically nor practically, in this country, is there any obstacle to any individual's becoming rich, if he will, and almost to any amount that he will ; — no obstacle, I say, but what arises from the dispensations of Providence, from the unequal distribution of health, strength, and the faculties of mind. In other words, there are no obstacles but natural and inevitable ones ; so- ciety interposes none, and none exist which society could remove. And ours is the only community on earth of which this can be said. Here there are no castes, and not even an approach to a division of society by castes. Our whole population is in that state which I have attempted to describe as the condition of the inhabitants of a free town in the Middle Ages. The property which is rapidly gained is often quite as rapidly spent, for the sake of that consid- eration and influence which the reputation of riches alone can give. Hence, wealth circulates among us almost as rapidly as the money which is its representative. A great fortune springs up, like the prophet's gourd, in a night, and is dissipated by some unforeseen accident on the morrow. Every one is made restless and anxious by this exposure to sudden change ; but one great good comes of it, — that it keeps down permanent discontent, and stifles the jeal- ousy that is usually nursed by social differences and inequalities of fortune. How is it possible, indeed, that the poor should be ar- rayed in hostility against the rich, when — to adopt a former illus- tration — the son of an Irish coachman becomes the governor of a State, and the grandson of a millionnaire dies a pauper 1 The effect of democratic institutions is to stimulate an energy and activity in the pursuit of wealth, which accomplish greater wonders than all the modern inventions of science, which actually generate enthusiasm of character, and are regarded by foreigners with surprise and distrust, as_ the tokens of some constitutional 106 ADVANTAGES OF THE POSSESSION OF WEALTH. disease in the body politic. Even the Irish immigrant here soon loses his careless, lazy, and turbulent disposition, and becomes as sober, prudent, industrious, and frugal as his neighbors. Nearly all the enormous fortunes that have been gathered in this country are the growth of a single lifetime, and therefore, even if they were more evenly distributed than they now are at the death of their founders, there would not be a smaller number of them in the succeeding generation. Consequently, they are regarded as the prizes of industry, economy, and enterprise ; and the sight of them stimulates and sustains exertion, instead of chilling and repressing it, which is the effect produced by the fixedness, in certain families, of vast hereditary estates. The aspect of society in England in this respect I will not say is the direct contrary of what it is here ; for, with regard to a very large and influential class, it is just the same. The middle class ■ — what^on the Continent would be called the bourgeoisie, the merchants, the manufacturers, the small tradesmen, the master mechanics — are about as busy as we are here, in the pursuit of wealth ; and their numbers and influence in the state gave occa- sion to Napoleon's sarcasm, that the English were a nation of shopkeepers. But the parallel between their condition and that of the free towns in the Middle Ages may be carried much farther ; outside of the city-walls there are the nobles and the serfs. The ef- fect of the activity of the commercial class upon the eye of the philosophical observer is qualified by the comparative repose — the stagnation, one can almost say — of the laboring poor and of the nobility and landed gentry. These two classes, the top and the bottom of English society, are true castes, for nothing short of a miracle can elevate or depress one who is born a member of either. The true movement, the life, of the community in Great Britain is among those who are engaged in commerce and manufac- tures : here are alternations of fortune, — not so frequent, perhaps, as in this country, but as sudden and as great. An Arkwright begins life as a barber, and ends it as a millionnaire ; a Peel gives his days and his nights to cotton-spinning, and his son be- comes prime-minister of England. But outside of this class there is stagnation and death. One half of the whole population is com- posed of laborers who subsist entirely upon wages, who cannot make savings if they would, for their whole earnings barely INJURIOUS EFFECTS OF CASTE. 107 suffice to keep soul and body together. Hopeless of rising, encour- aged by no examples, among those who were born his equals, of elevation to a higher grade, the laborer has no ambition, no thought even, of changing his position in life. His condition is best described in the strong language of McCulloch, when he speaks of "the irretrievable helotism of the working classes of England." And the upper classes, the nobility and the gentry, occupy a sphere which is equally immovable." With estates locked up by entails and marriage settlements, so that they cannot squan- der them, with an inherited scale of expenditure proportionate to their rank and fortune, so that they cannot make savings from income, and with a measure of political influence and social con- sideration secured to them by the long-established habits and opinions of their countrymen, they form a caste almost as fixed as that of the Brahmins in India. Great inequality in the distribution of wealth may operate ei- ther as a check or a spur to industry and frugality ; it is not, then, in itself, to be deprecated. On the contrary, a perfectly uniform partition of the goods of this world, if it were possible, which it is not, would create universal torpor. Take away the fear of pov- erty and the hope of rising in the world, and no one would exert himself but for his own amusement. Add the power of a despot, to make such exertion compulsory, and we should have exactly that state of things which existed in Egypt and India, when the in- stitution of castes as yet was unimpaired. If the whole population formed but one caste, from which they could neither sink nor rise by any fault or merit of their own, they would be no more inclined to labor than if they were divided into several castes. It is the fixedness, and not the inequality, of fortunes which is to be dreaded ; it is the retention of them in the same families throughout many generations, which chills exertion and unnerves the right arm of toil. Wherever there is motion, there is life. Property cannot be rendered immovable, except by the effect of human institutions which are designed to counteract the laws of nature. In this in- stance, surely, if in no other, the political economist has a right to cry, Laissez faire ! — let alone ! and do not attempt to amend the ways of Providence ! We do try to amend them when we attempt to enforce, or to render permanent, either equality or inequality. Laws of primogeniture find entail, the object of which is to insure 108 ADVANTAGES OF THE POSSESSION OF WEALTH. to certain families the possession of their wealth forever, are not a whit more unnatural and unjust in their operation, than would be the schemes of the philanthropic reformers, as they call themselves, who would fain reconstruct society on the basis of making the dis- tribution of all property equal and unchangeable. " The laws and conditions of the production of wealth,'' as Mr. Mill remarks, " partake of the character of physical truths. There is nothing optional or arbitrary in them. Whatever mankind pro- duce must be produced in the modes and under the conditions im- posed by the constitution of external things, and by the inherent properties of their own bodily and mental structure. Whether they like it or not, their production will be limited by the amount of their previous accumulation ; and, that being given, it will be proportional to their energy, their skill, the perfection of their ma- chinery, and their judicious use of the advantages of combined la- bor. Whether they like it or not, the unproductive expenditure of individuals will, to an equal extent, tend to impoverish the com- munity, and only their productive expenditure will enrich it. The opinions or the wishes which may exist on these different matters do not control the things themselves." Among such ultimate laws is the tendency to an unequal distri- bution of the wealth that is created by human labor. A law of natural justice, which is recognized by savages quite as much as by civilized nations, assigns the ownership of a useful article to him by whose skill and industry that article was created. The game that is caught, the implement of the chase that is manufactured, belongs, by the consent of all, to him by whom it is caught, or made. Nor is any alteration produced in this law because the suc- cessful person has so much strength, skill, and enterprise, that he can catch or manufacture two or three times as much as any other member of the tribe. The property is still recognized as his, for this simple reason, if for no other, — that he would not put forth his force and ingenuity if others should deprive him of their fruits. Again, if he chooses to hold these articles iu reserve, instead of im- mediately consuming them ; if he prefers a wigwam well stocked with implements of war and the chase, and a store of food for fu- ture use, to present indolence or the immediate gratification of his appetites, still his rights of ownership are respected. His prudence and economy, as much as his strength and skill, are allowed to re- INJURIOUS EFFECTS OF CASTE. 109 dound immediately to his own advantage. There is even a strong- er reason for respecting his property in this case than in the former one ; for the whole community profit by his savings : they operate to some extent, as an insurance to them all against famine. There is now a stock of food or implements in the tribe, which, though not common property, may still operate for the benefit of all at some future day, when the chase happens to be unproductive, be- cause the owner will sell them to others for their services, or for honors which it may be in their power to bestow. In this simple instance, we can easily see how injurious it would be to the common welfare if the rights of property were not re- spected, and how surely such respect tends to an unequal distribu- tion of the fruits of industry and frugality. As men are differently endowed by nature with faculties of mind aud body, with indolence or energy, with improvidence or thrift, so their situations in life must differ. And it is the true policy of society to encourage the more valuable qualities ; ■ — not to dishearten frugality by depriving it of its savings, nor to foster idleness by feeding it with the fruits obtained by the persevering toil of others. In civilized society, the same principles hold. The case becomes a little more compli- cated, because, by the transmutations of capital that have already been explained, the property of an individual is constantly assum- ing various shapes. But so long as it continues productive proper- ty, so long, in one form or another, must it further and assist the operations of labor ; and so far must it benefit others as well as the owner. The general law, that industry is limited by capital, is borne out by the obvious consideration, that without implements, machinery, raw material, and a previously accumulated stock of food and clothing, the workman cannot bestow his labor to advan- tage, — cannot, in fact, work at all. Even if it were granted that all the wealth of a nation could be distributed equally among all the people, and that the stock of it, by obliging all to labor alike, would forever remain equal to all their wants, — and no more improbable supposition could be framed, — it is certain that this would be no real improvement of their condition. " Those who have never known freedom from anxiety as to the means of subsistence," says J. S. Mill, " are apt to overrate what is gained for positive enjoyment by the mere ab- sence of that uncertainty. The necessaries of life, when they have 110 JOINT-STOCK CORPORATIONS. always been secure for the whole of life, are scarcely more a sub- ject of consciousness, or a source of happiness, than the elements. There is little attractive in a monotonous routine, without vicissi- tudes, but without excitement, — a life spent in the enforced ob- servance of an external rule, and performance of. a prescribed task ; in which labor would be devoid of its chief sweetener, the thought that every effort tells perceptibly on the laborer's own interests or on those of some one with whom he identifies himself; in which no one could by his own exertions improve his condition, or that of the objects of his private affection ; in which no one's way of life, occupations, or movements would depend on choice, but each would be the slave of all." People are not aware, or do not sufficiently consider, that the sight of the two extremes of opulence and poverty — the hope of rising to the one or the fear of falling into the other — is the con- stant stimulus which keeps up that energy and activity of the hu* man race, through which alone these goods are created. Make men secure of a provision for all their wants, take away from them all objects of ambition, destroy both anxiety and emulation, — and these are the certain results of an enforced equality of proper- ty and condition, — and, after a few years, even if there remained anything to be divided among them (which there would not be, for their wastefulness under such circumstances would equal their indolence), they w;ould become useless and discontented drones, de- voured by ennui, or eager for wrangling and fighting with each other, as the only means of relieving their otherwise stagnant existence. CHAPTER VII. STRIFE BETWEEN LABORERS AND CAPITALISTS : STRIKES AND TRADE- UNIONS : MEANS OP IMPROVING THE CONDITION OF THE LABORING CLASSES. The rate of wages in any country is determined by the competi- tion of the laborers with the capitalists. Which shall have the ad- vantage in the competition will depend on the relative numbers of the two parties, and will be in an inverse ratio to these numbers. JOINT-STOCK CORPOKATIONS. Ill In England, certainly, the capitalists have the advantage : their immense accumulations, and the fewness of those who can compete with them, when compared with the vast number of those who sub- sist entirely upon wages, enable them generally to dictate their own terms, and to keep wages at the lowest point which will sup- ply the workmen with the necessaries of life. In this country, the laborers have a considerable advantage ; though in some respects they are not on equal terms with the capitalists, many of whom are now as wealthy as those of the same class in England. Most of the laborers for wages here have a little capital of their own, on which they could subsist for a time ; or, owing to the great demand for labor, they can find work in other establishments, perhaps in other trades. Here, frequently, it is not the employer who dis- charges the workman or the domestic, but the workman or the do- mestic who discharges the employer. Many kinds of production can be successfully kept up only upon a large scale ; for the larger the enterprise, the farther the divis- ion of labor may be carried. In order to keep such enterprises in motion, capital must be aggregated in large masses. In England, the great inequality of the distribution of wealth allows such enter- prises to be managed by individuals : in most cases, a large manu- facturing establishment is owned either by one person, or by a firm which embraces but a few partners. In the United States, from what was, not many years ago, the comparative paucity of large private fortunes, such an establishment was generally formed and conducted by a joint-stock company, • — which is comparatively a modern invention, but one that, from its democratic character, is peculiarly, suited to this country and to the wants of the age. Many small capitalists, by clubbing their means, can successfully compete with men of vast fortune, — an undertaking which would otherwise be a hopeless one, as the great capitalist can live through reverses of trade, commercial crises, and casualties, which would ruin one who had little or nothing in reserve. So consonant are these joint-stock companies to the genius of our institutions and to the circumstances of the country, that they have multiplied with astonishing rapidity. They have survived even the necessity which called them forth ; for, as large private fortunes have sprung up with the growth of national opulence, .the owners of them have preferred to distribute their capital by taking stock in many of 112 STRIFE BETWEEN LABOR AND CAPITAL. these associations, rather than to concentrate it upon one under- taking. The risk of a sweeping calamity is thus materially dimin- ished. I know of nothing more irrational than the common prejudice against such corporations. They are true Savings' Banks, in which the common laborer not infrequently invests his modest savings, and shares the., gains of his wealthy employer, instead of being crushed by competition with him. It is not unusual, I believe, for operatives to hold stock in the very manufactories in which they work for wages. At any rate, the Savings' Bank, to which they first confide the fruits of their economy, often invests them in such stock. These corporations allow persons of very moderate means to participate in enterprises which, in other countries, are conducted exclusively by the rich. The occasional failure of one of them does not bankrupt many of the stockholders, whose prop- erty invested in other ways is left untouched ; and as this seems a hardship to the creditor who has lost a portion of his due, he is apt to declaim against those who are rich and still do not pay what they owe. But his accusation is unjust : he who allows such an institution to become, indebted to him trusts it on account of the largeness of its capital, and its supposed solvency. If he pre- fers, he may trust an individual who is supposed to be worth only $ 50,000, instead of a corporation reckoned at ten times that sum. If he chooses the latter course, he trusts the corporation, not the stockholders ; he deliberately prefers the joint-stock security to the security offered by individuals : and, consequently, has no reason to complain if the latter do not pay him. During the last quarter of a century, joint-stock corporations consisting of operatives alone, and other associations of laborers with each other in order to promote their common interests, have rapidly increased in number and influence throughout Europe, but especially in England, France, and Germany. The disastrous revolutions of 1848 first drew serious attention to the fact that great uneasiness and discontent existed among the laboring classes in these countries, and especially among those who were more educated and intelligent. Labor and capital, instead of working harmoniously with each other in the pursuit of a common end, had come to be regarded as opposing interests, and the rivalry and antagonism between them often passed into feelings of bitter STRIKES AND TRADE-UNIONS. 113 hostility. The earnings of the workman, even when united with those of his wife and children, were barely sufficient for subsistence on the coarsest and cheapest food ; while the aggregation of busi- ness and capital into a few hands, the improvement of the machin- ery, and the immense scale on which the work was done, disposed the laborers to contrast the wealth which they created for their employers with the misery of their own condition. The gains of the capitalists, it is true, were not always as large as they seemed. The keenness of their competition, and the rivalry of nations in the attempt to undersell each other in the markets of the world, often reduce profits to a minimum. Hence the first combined attempts of the operatives to enforce higher rates of wages often defeated their own end, by destroying profits altogether and there- by driving capital out of the business. Still the belief prevails, — and it is too well founded, — that while there has been a prodigious increase in the efficiency of labor and in the amounts of wealth produced, the manual industry which has done nearly the whole work has failed to secure its just share of the proceeds. The conviction is wellnigh universal, that there must be a readjust- ment of the relations between capital and labor, and a larger share of the values produced be allotted to the latter. Labor, as we have seen, is limited by capital, and can accom- plish little or nothing without its aid. But there is no sufficient reason why the ownership of these two agencies should be entirely disjoined; why comparatively few persons should own or control all the capital, and a vast number depend solely upon the wages of their handiwork. Hitherto a remedy for the hardships and injus- tice of the laborers' lot has been sought chiefly through their com- bination with respect only to their industry, strikes being organized to enforce higher rates of wages, under the penalty of work being discontinued all at once, so as to cause machinery and other forms of capital to remain idle for a considerable time at a great loss to their owners. But it is easy to see that strikes are ruinous to both parties, — to the employed as well as to the employers. By diminishing production, discouraging enterprise, consuming cap- ital unproductively, and bringing in foreign competition, they dissipate the means of paying wages, and contract the field for the employment of industry. They spread dissension and inflame hostility, not only between employers and workmen, but among the 9 114 STRIKES AND TRADE-UNIONS. workmen themselves, the majority of them striving by insults and outrages of every sort, sometimes even by violence and menaces of death, to compel a few dissentients to engage in the strike against their will. The funds previously accumulated to support them in their self-enforced idleness are soon expended ; privations and extreme suffering ensue ; and then the irritated and half-starv- ing operatives seek vengeance by attacking the property or lives of their former employers, and thus incur the full penalties of the law. Even when strikes succeed, they have a demoralizing influence : they violate the inalienable right of every individual to dispose of his industry and his property as he pleases ; and they lead to an uujust distribution of wages, because the uniform rates thus es- tablished raise the indolent and the unskilful to an equality with industrious and efficient workmen. Periods of compulsory idle- ness are destructive of all good habits, and impair the efficiency of subsequent work. Then, too, strikes do not always succeed. The employers can combine, as well as the employed ; and on account of the fewness of their number and their large command of capital, they can hold out, though at great loss, longer than their opponents. They meet the strike by what is called a " lock- out," — shutting up every branch and department of all the man- ufactories, and thus compulsorily increasing the number of op- eratives without work, so that the funds provided for supporting them in idleness may be sooner exhausted. Often the distressed laborers are thus driven to surrender ; and then, after they have wasted all their previous earnings, and submitted to much hard- ship, they sullenly, go back to work at the old, or even at reduced, rates of pay. But, however inexpedient aud demoralizing strikes may be, they cannot, so long as those engaged in them refrain from any sort of outrage, be justly forbidden by law. Operatives have as good a right to form combinations either to work or to abstain from work, as their employers have, to unite in establishing a tariff of prices or wages. In this respect, the only motto for both parties must be, Laissez /aire. If there is no express agreement to that effect, neither party is justly bound even to give previous notice of the termination of his engagement : no such contract ought even to be implied, in the absence of express stipulation. The pre- STRIKES AND TRADE-UNIONS. 115 sumption of law should always be in favor of the largest liberty for both parties. English legislation attempted for a long while to curtail this freedom, by making it a penal offence for the workman or servant — the two words, used indiscriminately, showed in what estimation the former was held — to quit his employment without good cause, or to combine with others in an endeavor to raise wages. But such statutes are now repealed or disregarded, from a conviction of their injustice and inutility. Labor, as Mr. Thornton reminds us, will not keep. It cannot, like other commodities, be stored away to await a favorable turn in the market ; but it must be sold immediately, or a portion of it will be wasted with every hour's delay. Unlike most other traffickers, also, the laborer has but one commodity — his industry — to sell : if he cannot dispose of that, he has nothing else where- with to buy food. The capitalist-employer, on the other hand, has many alternatives. He can invest his property in government or railroad stock, send it out of the country in foreign under- takings, or put it into those forms of manufactures which, as they are carried on mainly by fixed capital, require comparatively few hands. The most impolitic thing the workmen can do is to pro- voke a contest with their employers in some branch of industry in which, because recently established or otherwise in an unprosper- ous state, only low wages can be afforded. A strike is none the less fatal to them because it also ruins their paymasters, and thereby shuts up one field for employment. Those who work for wages, moreover, often do not have much except their wages to live upon ; and thus they find the old saying is true, that " the destruction of the poor is their poverty," for it will not allow them to chaffer about the price to be paid for their industry. The employers usually have to regard only their own competition with each other, being confident that the lowest price which they are thus induced to offer cannot fail to be accepted by nearly destitute applicants for work. When the rate of profits is high, this com- petition may be so keen that high pay will be offered ; but if the success of previous strikes has reduced profits to a minimum, the competition slackens so much that employment can be had only at very low rates. Thus the very success of the strikes may so far defeat their own object as to render any employment of labor on a large scale unprofitable. 116 STKIKES AND TEADE-TJNIONS. Strikes are always impolitic in the long run, then ; for an open contest between labor and capital must be ultimately destructive in its effects upon both. But as they are sometimes successful for a while in their immediate object, organizations for supporting them, and carrying them out on a large scale, have become very numer- ous of late, both in England and America. These Trade-Unions, as they are called, sometimes have as many as 50,000 members in a single branch of industry ; and by levying a small monthly as- sessment on the earnings of each, they accumulate large funds as a provision for any contest that may be impending. In England, in 1865, the Miners' Association had 54,000 members, and the "Amalgamated Engineers" 43,000, distributed into 308 branches, and increasing at the rate of two or three thousand yearly. The annual income of these " Engineers " was over $ 430,000, and their accumulated funds amounted to $ 700,000. The " Miners " in Pennsylvania, and the " Knights of St. Crispin," or associated boot and shoe makers, of Massachusetts, are hardly less numerous. They are under perfect discipline, turning out on strike at a day's no- tice, and remaining out till the word is given to end the strike, all their movements being carefully concerted by their officers. They enforce membership even on those operatives who are unwilling to join them, by refusing to work for masters who employ non-Union- ists. In this way, employers have been compelled to discharge their own brothers or nephews, if they had not joined the Union. Thus armies of workmen are arrayed, as it were, in a hostile camp, to wage war upon that Capital on which the efficiency of their la- bor mainly depends. All of the associations are also more or less affiliated with each other, and their treasuries render mutual aid, so as to prolong the contest till the patience or the capital of the particular employers who are standing out is exhausted. In all free countries, also, by concerted action at the political elections, they often obtain so much influence over the legislature as to dic- tate the enactment of laws to favor their interests. Master man- ufacturers, thus attacked, have no resource except to break up their establishments, and either send their capital abroad, or see it rapidly waste away. Then, indeed, skilled artisans cannot obtain employment on any terms, and are compelled to become agricul- turalists or rude laborers. As labor and capital, in the natural exercise of their functions, ALLIANCE OF LABOR WITH CAPITAL. 117 are mutually dependent, and assist each other, we can see no cause for the misunderstanding and antagonism between them, except that they are too exclusively owned or controlled by different classes of persons. It would be Utopian to expect, indeed, that every capitalist should also be an artisan, and every artisan, at least in some small measure, a capitalist. But however it may be in the Old World, there is no reason, here in the New, why they should not go into open partnership with each other, throw their common earnings into one stock, and divide this upon equitable principles depending upon their respective efficiency and merits. Their union may even be so close that their respective shares would no longer need to be designated by distinct names, as Wages and Profits. As the evil arose from massing capital into too few hands, — a result which has been met and counteracted by massing the laborers into few associations, — the remedy must be found by breaking up both aggregations, and resolving them into so small bodies that the same persons may own both capital and labor, and throw these into a common fund. The principles for the estab- lishment of such union, and for the equitable division of the com- mon earnings, may be easily discovered, though it may be difficult to reduce them to practice. If the ordinary profits on Circulating Capital are ten per cent, and the ordinary wages of a skilled workman are $ 500 a year, it is obvious that one who contributes $ 5,000 as capital, and the arti- san who contributes a year's labor, ought to receive an equal share of the common earnings. Then a manufactory carried' on by half a million of capital and two hundred operatives might be made a joint-stock corporation of three hundred shares, one third of which would represent Capital, and the other two thirds Labor. From the net annual earnings, a sum sufficient to replace the Fixed Capital, vested in machinery, etc., as fast as it was worn out, should be deducted, and the remainder be equally divided among the three hundred shareholders. Inequality of skill and industry . among the persons employed might be equitably compensated by allowing only half a Labor-share to an inferior workman, one and a half shares to a first-class hand, three shares to an overseer, and ten shares, or more, to the general manager and superintendent. The shares representing Capital need not be equally distributed among the associates ; but in order that the fusion of interests be- 118 ALLIANCE OF LABOR WITH CAPITAL. tween Labor and Capital might be as perfect as possible, each op- erative should own at least a fraction, say one fourth, of a Capital- share ; while an overseer should possess not less than three such shares, and the general manager all the others, no person being al- lowed to own any capital in the concern who did not also contribute his own labor. As the operatives could not wait till the balance was struck at the end of the year before receiving any portion of their earnings, the invested capital ought to be large enough to allow advances to be made, weekly or monthly, of sums not ex- ceeding three fourths the probable amount of such earnings, in- terest being allowed to those who did not require the advances. In such a joint-stock association, each associate contributing both Labor and Capital, no antagonism such as leads to strikes could arise, and there would be no dispute about the equitable division of the common earnings. Another great gain would be se- cured, in that the strongest inducements would be offered for the diligence and fidelity of all the hands, each watching his fellow, in order that no carelessness or shirking of work should impair the net product. Several of the English Trade-Unions make rules ex- pressly forbidding unusual exertion or . activity by any workman, the object being to obtain as much pay, and do as little work, as possible. Bricklayers' laborers, for instance, are not allowed to wheel bricks in a barrow, or to carry more than eight or ten bricks at a time on their shoulders, the number varying with the height to which they are carried ; and the " Operative Masons " are en- joined "not to take up less time than an average mason in the execution of each description of work." Under such regulations, one is not surprised to learn that some kinds of English manufac- tures are already surpassed in excellence and cheapness by those made on the Continent, and that so many of the latter are im- ported into Great Britain that the operatives there are beginning to clamor loudly for a renewal of the Protective System. Free Trade finds advocates only among those who are sure that they have nothing to dread from foreign competition. The large funds accumulated by the Savings' Banks, Friendly Societies, and Trade-Unions, both of England and America, prove that laborers save enough from their earnings to enable them to furnish much of the capital for the very manufactories from which they now receive nothing but wages. There is no reason why this ALLIANCE OF LABOR WITH CAPITAL. 119 portion, at least, of the national Capital should be divorced from Labor in its application, though already united with it in owner- ship. By combining their responsibility they may also obtain credit for large loans of Capital, as has been proved by the great success of the Credit-Banks which Schulze-Delitzsch has estab- lished throughout Germany. One workman cannot usually obtain a loan when he needs it, for his credit is not good enough, and he has no security to offer. But if a hundred workmen combine, in one of these Banks, both their credit and their small savings, the Bank can obtain for them loans at least thrice as great as the sums which they have de- posited in it, the security being the aggregate of these deposits, besides the joint and several responsibility of all .the depositors. The aggregate Capital thus formed — consisting, we will suppose, of $5,000 received from the deposit of savings, and $10,000 more obtained by loan from other institutions or individuals — is then invested, at a somewhat higher rate of interest, in small loans to those of the depositors themselves who happen to need such ad- vances ; and thus one of the workmen so associated can obtain for a considerable time, and at a moderate rate, the use of a capital from two to four times as great as the amount of his own savings. A small entrance-fee is required, and then the value of one share, which is $ 50, may be made up by small monthly payments : a loan can be obtained only when the share is fully paid up. The profits of the Bank arise from the interest obtained on the sums deposited, and from the difference — usually three or four per cent — between the interest received and that which is paid on the amounts procured by loan. After deducting five per cent, in order to form a reserve fund which, together -with the entrance-fees, will ultimately cause the Bank's own stock to equal its borrowed capi- tal, these profits are divided annually among the shareholders. Any one who quits the association by withdrawing his deposit for- feits his share of this reserve fund, and also continues for a year to be liable for the debts incurred by the Bank before his withdrawal. Only the shareholders can obtain loans, and as they constitute the association and control its management, they keep a sharp lookout on each other, to prevent their profits from being diminished by irrecoverable debts. Such an institution is evidently a modified Savings' Bank, which 120 ALLIANCE OF LABOE WITH CAPITAL. employs both its own funds and its credit to enable its depositors to add the profits of capital to the wages of their labor. The plan has had great success; for, in 1865, there were 1,300 of these Credit-Banks in Germany, with more than 300,000 members. About 500 of them, from which we have returns, had nearly ] 70,000 members ; had accumulated eight millions of dollars in their share capital, additional deposits, and reserve funds ; had loaned in one year fifty millions to their shareholders ; and had distributed, as the net profits of one year's operations, nearly $ 288,000, or over three and one half per cent, having lost in that year only $15,000 by bad debts. Experience has proved, also, that the capital thus placed within the control of the workman can be profitably applied by him in connection with his own labor, and will make that labor more faithful and economical, more painstaking and contented. Co- operative stores have been established with cap'ital supplied by the laborers themselves, at which they can obtain the necessaries and comforts that they require, on better terms than can be of- fered by the retail tradesmen, who are burdened with heavy expenses in rent, advertising, competition with each other, and bad debts. The poor are obliged to pay high prices for bad pro- visions and groceries, because they buy very small quantities at a time, thus enhancing the cost of weighing, making up packages, etc. ; because they are not good judges of the quality of the ar- ticles purchased ; and because, though they cannot obtain credit for themselves, they must pay the higher rates of profit necessi- tated by " bad debts " from other customers, which the most prudent retail dealers cannot wholly avoid. The Rochdale Pio- neers' Association was founded, in 1844, by twenty-eight journey- men mechanics, who had kept out of debt, and who, by combining their means, made up a little capital, less than $150, hired a room at a rent of $50, purchased at wholesale prices some sacks of flour and oatmeal, a barrel of sugar, a firkin of butter, and a few other small articles, and commenced business. One of them was deputed to act as salesman, the store being opened only for a few hours in the evening twice a week. Rigidly adhering to the rule of selling only for cash, and charging for good articles only the prices current in the neighborhood for bad ones, they soon found that over fourteen per cent of these prices were returned to them ALLIANCE OF LABOR WITH CAPITAL. 121 at the end of the year under the form of a thirty-per-cent divi- dend of profits on their Capital. Very soon, coal, meat, shoes, cotton and woollen goods, and all other commodities which work- men need to purchase, were added to the original business, and the institution has become one of the most prosperous ever es- tablished for the benefit of the working classes. In 1867, it had nearly seven thousand memhers, employed $ 640,000 as capital, and distributed over $ 200,000 as profits. Nearly two hundred similar Co-operative Store societies have since been established in England, and their sales amount annually to thirty millions of dollars. Many others have been founded in Germany and this country, and always with good success when they have adhered to the rule of never selling on credit, and when they have had com- petent and faithful managers, whom it is always good policy to secure, even at high salaries. In many instances, also, manufacturing and mining enterprises, and the mechanic arts and trades, have been successfully con- ducted, and on a large scale, — either by the workmen themselves furnishing the capital, or a large portion of it ; or by capitalists giving to their operatives a share of the profits in addition to their ordinary wages. Even in the latter case, where the alliance be- tween Labor and Capital is less complete, it is generally found that the more hearty co-operation, thus secured, of the employed with their employers, and their greater diligence, zeal, and carefulness in the work, so much increase the profits that the net income of the proprietor is larger than its gross amount was before any de- duction was made for the benefit of the workmen. Thus, the Briggs collieries in England had been conducted for twelve years with small success, chiefly, because the men employed, nearly one thousand in number, were on ill terms with the pro- prietors ; strikes were frequent, — one of them lasting for thirty- five weeks ; holidays were often demanded, during which the machinery and works remained idle at a great loss ; and general waste and carelessness prevailed. Consequently, the profits were small, for two years being only five per cent, and rising above ten per cent only for one year. To remedy this state of things, the business was transferred, in 1865, to a joint-stock company, one third of the shares being offered, at $ 50 each, to the miners and hired agents and overseers. It was also, agreed that, whenever 122 ALLIANCE OF LABOR WITH CAPITAL. the profits, after reserving a portion sufficient to renew the machinery when worn out, should exceed ten per cent, one half of such excess should be distributed as a bonus to all the persons employed in or about the collieries, in sums proportional to their respective earnings during the year in which the profits accrued, the other moiety of the surplus being added to dividend on capi- tal. This offer certainly was not remarkable for liberality ; but it operated like a charm in producing the heartiest co-operation and good- will among all the parties concerned, and in promoting indus- try and avoiding waste. At one time, the price of coal having fallen, even a general reduction of wages was accepted without remonstrance. For the first year of the new system, the profits were fourteen, for the second they were sixteen, and for the third, seventeen per cent. In 1858, four hundred and fifty-four shares had been purchased by those engaged in the collieries, and the market price of each share had risen to $ 72. A similar experi- ment, tried for over fifteen years by M. Leclaire, — a house-painter employing, in Paris, more than two hundred hands, — has been equally successful. Many attempts have been made to effect a still more complete alliance between the two agents of production, the whole capital being owned or managed by the work-people. This end, of course, is more difficult to be accomplished, even on a small scale, and is impossible on a large one ; since the laborers, even by clubbing their savings and their credit, cannot obtain capital enough to meet all the exigencies of a great manufactory, and to live through the reverses to which they are exposed in the fluctuations of trade. The mode of trying the experiment is obvious enough. " A num- ber of workmen, having contrived to procure the needful tools and raw material, must agree to work together at the same trade, under directors chosen by themselves from amongst them- selves, and must further agree that the entire net proceeds of their industry shall be divided, in some prearranged proportion, among all who have contributed, whether by their labor or their capital, or by both, to the joint production.'' The French govern- ment has recently aided such enterprises by moderate loans at the outset ; and with such aid, some associations of printers, cabinet-makers, masons, and other classes of artisans, at Paris, have \een decidedly successful. Thus, in 1848, nine journeyman cabi- ALLIANCE OF LABOR WITH CAPITAL. 123 net-makers formed themselves into a joint-stock company, with only one hundred dollars of capital. They soon obtained a good deal of custom, and their number increased more than tenfold. The state then helped them with a loan of $ 5,000 for fourteen years, at four per cent ; and in 1857, they numbered one hundred and sixty-five associates and " auxiliaries," and were doing a busi- ness of $80,000 a year. In 1862, there were fourteen similar societies at Paris among the various trades, having an aggregate capital of $ 180,000, and the products of their business amount- ing to half a million annually, the average rate of profit being nearly twenty-three per cent. In England, companies of this sort have not been so successful, as small enterprises there cannot so easily compete with large ones. Yet government has aided them, as far as seemed pru- dent and practicable. Parliament has passed laws sanctioning "partnerships of industry,'' as they are termed, in which the workmen are allowed to have an interest in the profits of the business, without becoming liable as partners for the debts ; and encouraging co-operative stores and associations. Statutes have also been passed to recognize and regulate " Friendly Societies," formed by workmen for mutual life-insurance, and to grant small weekly allowances in case of sickness ; also, to encourage building- associations, to open the Post-Offices as Savings' Banks for the laboring classes, and to grant annuities and life-assurances under the guaranty of the state. In Germany, under the practical guidance of the same wise philanthropist who invented and estab- lished the Credit-Banks, Schulze-Delitzsch, twenty-six companies had been established among the artisans, up to 1865, for the pro- duction and sale of finished wares on common account ; and one hundred and eighty other associations, with about ten thousand members, for the supply, at wholesale prices, of the raw materi- als required by those who worked separately at their respective trades. Some of these organizations have been successful, while others have failed to answer the expectations of their members. It is evident that many experiments must still be tried before the plans for combining the ownership of Capital with that of Labor — or, in other words, of merging profits and wages into a common fund — can be perfected. The attempt is most likely to succeed in those manufactures and trades in which labor con- 124 ALLIANCE OF LABOR WITH CAPITAL. tributes more largely than capital to the value of the commodity ; and unfortunately, the number of these is every day diminishing, because the progress of invention and the improvement of machinery tend inevitably to mass the business of production in vast establishments, which require an immense capital, and easily crush out, or outlive, small enterprises. In New England, for instance, within a quarter of a century, the invention of power- presses, sewing-machines, and almost countless contrivances for abridging manual labor in manufactures from iron and leather, have brought together into monster workshops the printers, tail- ors, shoemakers, and blacksmiths, who formerly plied their trades one by one, or in small parties. Another obstacle to the success of co-operative associations arises from the difficulty of securing competent head management. The direction of a large business generally demands great sagacity and foresight, perfect acquaintance with the markets, and famil- iarity with a mass of mechanical, pecuniary, and administrative details. These qualities are not often found united in one person, as is proved by the frequency of failures and bankruptcies ; and even when they exist, they are not likely to be fully developed and exerted, except under some stronger stimulus of self-interest than is afforded by the receipt of a good salary or a small fraction of the profits. Committees of management are proverbially negli- gent or meddlesome, inharmonious and unsuccessful : one execu- tive head, and a very able one, is an essential prerequisite of success in any large undertaking. It must be expected, then, that there will be the same alterna- tions of failure with success in the business of combined workmen, as in that of individual capitalists. It is for the workman himself to judge, whether he will quit the security of his present position for the heavy risks and doubtful advantages of an active share in the business. At present, he is guarantied against loss. The workman's wages are his share of the average profit and loss commuted into a fixed payment. " The capitalist alone endures all the losses, alone furnishes all the advances, alone encounters the risk of ruin, and receives only what profits may remain after the laborer's commuted share is paid. The workman's share is a first mortgage ; the capitalist's share is only a reversionary claim." Under the light of the experiments which have thus far been THE MALTHUSIAN THEORY OF POPULATION. 12/5 made, perhaps the best advice which can be given is, that the employed should continue in the receipt of moderate wages, and that the manager-capitalist should, for his own sake as well as for that of the other parties concerned, promote harmony, prevent strikes, and encourage diligence and fidelity, by annexing to the wages one third or one half of whatever surplus profits there may be. over such a rate per cent as would be an average income on ordinary investments. The probable result will then be, as in the case of the Briggs collieries, that the proprietor's share, after this deduction, will be greater than it would have been had no such deduction been made. CHAPTER VIIL THE MALTHTJSIAN THEORY OF POPULATION CONSIDERED AND REFUTED : THE TRUE LAW OF THE INCREASE OF POPULATION. The laws of Political Economy, for the most part, are inferences from the general fact that individuals compete with each other in the pursuit of wealth. Rents, Profits, Wages, Prices, are deter- mined by competition ; and as we are able to foresee what the effects of competition will be, we can show how these things will vary under given circumstances. Thus, Profits tend to an equal- ity in all employments, because capitalists compete with each other, and will withdraw their capital from a business which is less profitable, to invest it in one which is more so ; this influx of capital into the more lucrative employment soon reduces the rate of profit in it to a level with the Profits in other employments. The Price of an article, of which there is a given quantity in the market, is determined by the Demand for it, — that is, by the competition of the buyers. And this Demand, again, regulates the future Supply of that article ; for, as the competition of the buyers becomes warm, the Price is enhanced, the Profits of those who produce the article are increased, more capital is attracted into the employment, the Supply is enlarged, and the Price falls again. These principles are sufficiently obvious ; and if there were not 126 THE MALTHUSIAN THEOEY OF POPULATION. exceptional cases, if their application was not modified and re- stricted by a crowd of circumstances, Political Economy might be called a demonstrative, or even an intuitive, science. Its maxims might all be taken for granted, and men would act upon them without giving themselves the trouble of enunciating them in an abstract form. But there are numerous exceptions and modifying circumstances, which need to be carefully considered ; and in this chapter I propose to examine the most important of them. There are two things the Supply of which is not regulated by the Demand ; and they are two very important things, — namely, Land and Population. Our wants and our desires do not, in these two cases, create, or even tend to create, the means of satisfying them ; those means are wholly beyond our control. We cannot increase the quantity of surface of the habitable globe ; we cannot, at will, either enlarge the Population, or put limits to its growth, except by transgressing the moral laws which guard the sanctity of human life. It is conceivable that the well-being of a com- munity may be greatly affected by these two inexorable facts. With all its labor and ingenuity, it cannot materially enlarge the limits of its territory, except by robbing its neighbors; it may reclaim a little land from the waters along the margin of a river, a lake, or an ocean ; but it is obvious that its power in this respect is restricted within very narrow limits. And if its Population should begin to waste away, or to increase with undue and incon- venient rapidity, the will of a monarch or the wishes of a people would not suffice to arrest either its decline or its growth. Still they are dependent for food upon the products of the Land, the amount of which products must finally be limited by the extent of surface of the earth. On this possible or conceivable increase of the numbers of man- kind, united with the fact that the cultivable surface of the earth is a fixed quantity, which cannot be enlarged, is founded the cele- brated theory of Mr. Malthus. We are not at liberty to put aside the discussion of this doctrine, as if it were a mere speculation, which can have no practical importance except in a contingency certainly very remote, and which may never be realized. It is dwelt upon and applied by nearly all the English Economists as if it were a truth of great moment. The whole subject of Politi- cal Economy is colored with it ; it affects the doctrine of Rent, ' THE MALTHUSIAN THEORY OF . POPULATION. 127 Profits, and Wages, and leads to inferences in respect to each of them, which otherwise would be immediately rejected. The followers of Malthus are somewhat dogmatic in their enun- ciation of the doctrine, and altogether impatient of any doubt of its correctness. This positiveness arises from a perception of the unquestionable correctness of the data on which the theory is founded ; while the general reluctance to accept it proceeds from involuntary dread of the shocking conclusions that it has been made to support, and from disgust at the consequences of its practical application. The doctrine of Malthus is sometimes understood, in its extended sense, to comprise the whole body of these inferences from it, together with its application as advice for the government of men's conduct and the regulation of soci- ety ; and when it is thus understood, the common sense and natural feelings of mankind shrink from it with that strong aver- sion which the supporters of the theory stigmatize as " sentimen- tal horror." Taken in the more restricted meaning, always used by believers in the theory when it is controverted or denied, Mal- thusianism contains only one or two truisms about the law of in- crease that is common to the human race with the whole animal creation, which have no practical importance whatever, except for the purpose to which they were first applied by Malthus himself, — namely, to confute an absurd speculation by Godwin as to the perfectibility of the social state. Upon this ambiguity of mean- ing depends the whole controversy as to the law of Population and its consequences upon the well-being of society. The proposition upon which the whole theory rests is this, — that the power of increase of any race of animals, the human species included, is indefinite, or incapable of exhaustion ; and if it were exercised to the utmost, without any check from external cir- cumstances or from the animal 's power of self -control, the earth would not be large enough, I do not say merely to afford subsistence, but even to give standing-room, to the beings who would claim a place upon it. The capacity of increase necessarily acts in a geometrical progression ; for, each pair being capable of procreation, if a people, under certain circumstances, increase within thirty years from ten thousand to twenty thousand, a mere continuance of the same cause and the same circumstances would enlarge the number, within tht next thirty years, to forty thousand ; and the third period would 128 THE MALTHUSIAX THEOEY OF POPULATION. carry it to eighty thousand. For example, a given rate of increase, in the ten years from 1790 to 1800, added but 1,200,000 to the white Population of this country; but from 1830 to 1840, the same rate of increase added 3,600,000. The Population was more than doubled from 1790 to IS 20 ; it was again more than doubled from 1820 to 1850. But the former doubling added less than five mil- lions to our numbers, while the latter doubling added over ten millions ; and the next doubling, in 1880, will add twenty mil- lions. This law of possible increase in a geometrical progression be- longs to every species, both of the animal and vegetable kingdom, of which we have any knowledge ; it is an immediate and logical inference from the self-evident fact that every pair, whether of the earliest or the latest generation, whether forming part of a very small, or a very numerous, community, is equally capable of con- tinuing and multiplying its kind Its prolific power is not at all affected by the greater or smaller number of its fellow-creatures which may be already in existence. If Population should go on in this manner without check, it is evident that, within a few centu- ries, the earth might literally be overstocked with human beings : if they should stand shoulder to shoulder, as thickly as the stalks of wheat in a cultivated field at harvest-time, there would still be a call for room ; for the next thirty years would inevitably double even this immense assemblage. Observe that this law of increase by geometrical progression holds good, whether the annual rate of increase be fast or slow. In the United States, for instance, the annual rate, exclusive of the effects of immigration, is 2.39 per cent, and, as a consequence, the Population is doubled in little over 32 years. In France, the annual rate is but 0.C, and the Population, therefore, is not doubled in less than 115 years. StilL it will be doubled in that time; and therefore, in 230 years it will be quadrupled; thus fol- lowing the law of increase by geometrical progression, if it in- crease at alL The theory of Malthus may be said to owe its plausibdity, in great part, to the fact with which all arithmeticians are familiar, that a number, increasing by geometrical progression, within a few terms rises to a very formidable amount. Mr. Malthus further undertakes to show, that the means of sub- sistence, under the most favorable circumstances, cannot increase THE MALTHUSIAN THEORY OF POPULATION. ID so rapidly as the number of mouths calling for food. The race of Population against food, he maintains, is like that of Achilles against a tortoise ; it is too unequal, whatever may be the advan- tage at first possessed' by the weaker party. Whatever maybe the present superfluity of sustenance, or the means of increasing sustenance, Population multiplies so fast tha,t it must soon over- take and surpass the supply of nourishment. Looking at first only to Great Britain, he says : " If it be allowed that, by the best possible policy and great encouragements to agriculture, the average produce of the island could be doubled in the first twenty- five years, it will be allowing probably a greater increase than could with reason be expected. In the next twenty-five years, it is impossible to suppose that the produce could be quadrupled. It would be contrary to all our knowledge of the properties of land. The improvement of the barren parts would be a work of time and labor; and it must be evident to those who have the slightest acquaintance with agricultural subjects, that, in propor- tion as cultivation extended, the additions that could yearly be made to the former average produce must be gradually and regu- larly diminishing. i " Let us suppose that the yearly additions which might be made to the former average produce, instead of decreasing, which they certainly would do, were to remain the same ; and that the pro- duce of this island might be increased, every twenty-five years, by a quantity equal to what it at present produces. The most enthu- siastic speculator cannot suppose a greater increase than this. In a few centuries, it would make every acre of land in the island like a garden. If this supposition be applied to the whole earth, and if it be allowed that the subsistence for man which the earth affords might be increased every twenty-five years by a quantity equal to wliat it at present.produces, this will be supposing a rate of increase much greater than we can imagine that any possible exer- tions of mankind could make it. It may fairly be pronounced, therefore, that, considering the present average state of the earth, the means of subsistence, under circumstances the most favorable to human industry, could not possibly be made to increase faster than in an arithmetical ratio. " The necessary effects of these two different rates of increase, when brought together, will be very striking. Let us call the Popu- 9 130 THE MALTHUSIAN THEORY OF POPULATION. lation of this island 11 millions, and suppose the present produce equal to the easy support of such a number. In the first 25 years, the Population would be 22 millions ; and, the food being also doubled, the means of subsistence would be equal to this increase. In the next 25 years, the Population would be 44 millions, and the means of subsistence only equal to the support of 33 millions. In the next period, the Population would be 88 millions, and the means of subsistence just equal to the support of half that num- ber. And at the conclusion of the first century, the Population would be 1 76 millions, and the means of subsistence only equal to the support of 55 millions, leaving a Population of 121 millions totally unprovided for. " Taking the whole earth instead of this island, emigration would of course be excluded ; and supposing the present Population equal to one thousand millions, the human species would increase as the numbers 1, 2, 4, 8, 16, 32, and subsistence as 1, 2, 3, 4, 5, 6. In two centuries, the Population would be to the means of subsistence as 256 to 9 ; in three centuries, as 4,096 to 13 ; and in two thou- sand years, the difference would be almost incalculable." Malthus does not find much comfort in the fact that the hu- man race have already inhabited this globe for more than six thousand years, a period surely long enough, with the aid of a geometrical progression, even if the annual rate of increase had been very small, but regular, to have brought into being vastly more than the poor 800 millions who now stock the earth. Prac- tically, down to the present day, the only evil which has been felt has been, not an excess, but a deficiency, of Population. Even Spain, once the head of European civilization, had ten millions of inhabitants in the middle of the sixteenth century, and one hun- dred and twenty years afterwards it had only six millions. The classical scholar need not be reminded of the still more striking depopulation of Italy under the Eoman emperors, and, at a still earlier day, of the provinces which now constitute Turkey in Europe. Asia Minor and the region on the banks of the Tigris and Euphrates were teeming with inhabitants twenty-five centuries ago, while they are now very sparsely populated, and probably do not increase at all. But the causes which formerly kept down the natural increase of the people have now, in all civilized communities, in a great THE MALTHUSIAN THEORY OF POPULATION. 131 measure ceased to act. War is, at present, an infrequent and much less destructive calamity. Epidemic diseases no longer lay waste whole provinces; remedies for them, or modes of preventing them, have been discovered. The practice of vaccination alone, by robbing that frightful disease, the small-pox, of its terrors, has added some years to the average duration of human life. The greater prevalence of cleanliness, the improvement of the diet, dress, lodgings, and other accommodations of the mass of the peo- ple, and the drainage of bogs and marshes, by which agues and* marsh fevers have been prevented, with the many improvements in medical and surgical science, have materially lessened the rate of mortality, and thus caused the population to increase more rapidly. A comparison, made by M. de Chateauneuf, of the movement of the Population in most countries of Europe, from 1825 to 1830, with what it was from 1775 to 1780 — an interval of only half a century — supplies some striking illustrations of this point. Out of a given number of children born in Europe, only one third, says the author, now die in the first ten years, while formerly one half died within -that period. Fifty years after birth, three fourths of a generation, or 75 in a hundred, had died; now, only thirteen twentieths, or 65 in a hundred, die below the age of fifty. The proportion of deaths to the whole Population is now as one to forty; then, it was as high as one to thirty-two. These facts, to most people, would seem to afford great cause for congratulation. Human life has been made longer ; disease has lost a portion of its power, or has been conquered by care and medical science. Population is kept up, not merely by increasing the number of births, but by lessening the proportion of deaths ; thus, among a given number of inhabitants, there are fewer chil- dren; and hence the average strength and capacity, the productive power of the community, is increased. " The prevalent opinion," says McCulloch, " had been, that an increase of population was the most decisive mark of the prosperity of a state, and that it was the duty of government to stimulate its increase, by encour- aging early marriages, and granting exemptions from onerous public services, and bestowing rewards on those who reared the greatest number of children.'' " But Mr. Malthus," he adds, " has set the erroneous nature of 132 THE MALTHUSIAN THEORY OF POPULATION. this policy in the most striking point of view. He has shown, by careful examination of the state of countries in every stage of civilization, and placed under the most opposite circumstances, that the number of inhabitants is everywhere proportioned to the means of subsistence ; that the tendency of the principle of increase is not to fall below, but to exceed, these means " ; and consequent- ly, the Population must be kept down to its necessary level, either by the influence of moral restraint, and a proper degree of pru- dence and forethought in the formation of marriages, ■ — that is, by the Preventive check, which diminishes-the number of births, and so increases the effective power of the community ; or it must be kept down by the influence of mortality originating in vice, want, pestilence, and misery, — that is, by the Positive check, which in- creases the number of deaths, and so makes the community weaker than before. I cannot trace out here all the gloomy consequences which Mal- thus and his followers derive from his theory; it must suffice, to indicate a few of them. He assumes that the Population in every country in Europe has already increased to such a degree that it is actually pressing upon the means of subsistence ; and as it tends still to multiply faster than the quantity of food can be increased, the low wages of labor, poverty, disease, crime, and an average duration of life much less than it might be, are the inevi- table consequences. Stop up the evil in one quarter, and it must break out in another, on account of the prolific power which is in reserve. If we put an end to war, famine or some epidemic dis- ease must take its place, and carry off yearly as many victims as the war would have done. Stop the ravages of the small-pox by vaccination, and the Asiatic cholera, or some other disease, must appear, to scourge mankind with an equal number of deaths, if men will not learn prudence enough to diminish the number of marriages and births. The vessel is already full, and it is also fed from beneath with perennial springs. Check the overflow in one quarter, therefore, and it must escape in another. " I feel not the slightest doubt," says Malthus, " that if the introduction of the cow-pox should extirpate the small-pox, and yet the number of marriages continue the same, we shall find a very perceptible difference in the increased mortality of some other disease." Wages, it is further said, depend on the proportion between the THE MALTHUSIAN THKORY OF POPULATION. 133 numbers of the laboring class and the capital which is devoted to paying for labor. As the number of those seeking employment increases, — and it always tends, like a depressed^ spring, to rise, — the laborers compete with each other in offering to work at low prices, and Wages inevitably fall. Vainly does private munificence or public liberality seek to prevent this evil. Interference, in fact, only does harm : if the laborer can look to a poor-fund, or to pri- vate charity, to provide against the effects of his imprudence, he will never learn to be prudent. Leave him alone, then, say the Malthusians, to be chastised by fever, hunger, and misery into a sense of his obligation to society to refrain from increasing the number of his class. Let not the possession of a starving family constitute an additional claim for him who begs your chaiity; rather let it be his punishment. To devise means for relieving the present frightful condition of the laboring poor in England and Ireland is a hopeless and insoluble problem. The best advice which the leading Economist of this school can give his country- men, in respect to this subject, is, that they should "fold their arms, and leave the denouement to time and Providence.'' The most effectual means of keeping down the increase of Popu- lation, it is said, is, to raise the laborer's ideas of what is necessary for his maintenance. Thus, says Col. Thompson, "a laborer in Ireland will live and bring up a family on potatoes ; a laborer in England will see the world unpeopled first. Englishmen have the physical capability of living on potatoes as much as other men ; but fortunately they have not the habit ; and though it might be wrong to say that they would starve first in their own persons, they will utterly refuse to multiply upon such diet, — the effect of which on Population is ultimately tne same. The Englishman will not live and bring up a family on potatoes ; because, though he may consent to live on them when he can positively procure nothing else, habit, custom, the opinion of those around him, have made it in his eyes contemptible, irrational, absurd, for a man to be living on potatoes when he has the opportunity of getting any- thing better. In his hours of prosperity, therefore, he will to a cer- tainty solace himself upon bacon, and most probably venture upon beef; and as this, absorbs a greater portion of his income in what he views as necessary to his individual existence, it proportionally reduces his disposition to burden himself with new mouths." 134 THE MALTHUSIAN THEORY OF POPULATION. I have endeavored to give as full a view as possible of the the- ory of Malthus and its consequences, without disguising the force of any of the considerations that may be adduced in its support. Without accusing it of any demoralizing tendencies, it must be ad- mitted to present a very gloomy view of the condition of the human race, and of the ways of Providence with man. I hope to prove satisfactorily, that the doctrine itself is a mere hypothetical specu- lation, having no relation to the times in which we live, or to any which are near at hand. In those facts which appear so alarming to the Malthusians, I see only indications of a beneficent arrange- ment of Providence, by which it is ordained that the barbarous races which now tenant the earth shall waste away and finally disappear, while civilized men are not only to multiply, but to spread, till the farthest corners of the earth are given to them for a habitation. I begin with the proposition, that the power of the earth to afford sustenance is now so far in advance of the actual numbers of mankind, that no probable, and in fact no possible, increase of those numbers, not even by a geometrical progression, can create a general and permanent scarcity of food for centuries to come. The great and palpable error of the Malthusians consists in assuming, without a particle of evidence, — nay, when all the evidence tends to the contrary, — that the time has already come; that Population has reached its limits ; that there is even now a deficiency of food ; so that the only present mode of increasing the happiness of the lower classes is, to lessen their numbers. Malthusianism in its sim- plest form is only the expression of a law that belongs both to the animal and vegetable kingdom, and its truth is undeniable ; yet we say that it has no applicability to the present state of affairs, and we have no immediate concern in establishing its truth or falsehood. The absurdity of talking about the necessary pressure of Popu- lation upon the means of subsistence, as an explanation of the evils with which society is now oppressed, was well exposed, many years ago, by Col. Thompson. " If it should be urged," he says, " that there must ahoays come a time when Population will press against food, and therefore there is no use in attempting to escape it, — this would be like urging that there is no use in a man's escaping from murder now, because he will not be immortal afterwards. There is all the difference in the world between enduring an evil THE MALTHUSIAN THE011Y OF POPULATION. 135 by the will of Providence, and by the act of man. Human life, in the whole, is but the procrastination of death ; but that is no reason why men should die just now, for other men's convenience. There may come a time when there will be no coal to burn, no iron to make tools, and perhaps no salt left in the sea ; but this is no reason why men should not make something of the interval which must intervene. The time when Population will press irre- mediably against food must, to a great manufacturing and naval people, be almost as remote as the time when there will be no salt left in the sea." The average density of Population in Europe, in which quarter of the globe alone any excess of numbers is to be feared, for centuries to come, does not exceed 70 persons to the square mile. The Europeans, then, on an average, are not quite so crowded as are the inhabitants of Spain, a country the Population of which might be increased fourfold before it would be as thickly peopled even as England. Belgium has the densest Population of any state on the Continent of considerable magnitude, the average amounting to at least 350 persons to the square mile. Great Brit- ain and Ireland, in respect to which the complaints of over-popu- lation have been loudest and most frequent, had but 251 to the square mile in 1861, so that the population might be increased thirty-eight per cent before these countries would be as densely peopled as Belgium. Taking all Europe together, the Population might be five times as great as it is now, before the inhabitants would be as crowded as they already are in Belgium. Supposing that the average rate of increase for all Europe were as high as it now is in France, — a supposition which is certainly beyond the truth, • — more than three centuries must elapse before the Conti- nent could be thus peopled, even if no allowance were made for emigration, and for the gradual lessening of the rates of increase as the Population becomes more dense. Making allowance for these checks, the period must be increased to at least five centuries. An evil which is some five hundred years distant from us need not excite much alarm in the present generation. Is there any evidence, then, that Belgium is over-peopled, the country which is already in the condition that all Europe fears it will arrive at some five centuries hence ? By no means. The in- formation which shows that it is not, I derive from McCulloch, who 136 THE MALTHUSIAN THEORY OF POPULATION. is himself an ardent upholder of the theory of Malthus, so that his testimony can be received without question. " Although the culti- vation of the earth in this kingdom is carried to a great extent, one eleventh of the surface still remains uncultivated ; one eighth consists of grass lands, and the arable lands occupy one half. The very large produce obtained by the Flemish farmer is solely attrib* utable to indefatigable industry ; for the soil is naturally poor, and the climate is by no means especially favorable, the winters being longer and more severe than in England. The central part of the kingdom includes much of the richest portion of the soil ; but it does not, on the whole, exceed the average fertility of the inland counties of England, and must decidedly be considered inferior to the rich alluvial soils denominated the carses of Scotland. But taking the whole country together, the soil, artificially enriched, produces more than double the quantity of corn required for the consumption of its inhabitants, and agricultural produce is exported to a great extent." Looking, therefore, merely to the capacity of the earth to afford sustenance, it appears that the most densely peopled country in Europe, and one by no means richly favored in respect to the natu- ral properties of its soil, is not yet more than half populated ; and still several centuries must elapse before all Europe can be as densely populated as Belgium. Malte Brun has said that the soil of Europe alone could afford ample food for a thousand millions of inhabitants, being nearly five times its present number, and more by one fifth than the actual population of the globe. Turning to America, we find the basin of one great river, the Mississippi, ca- pable of supporting as many inhabitants as now occupy all Europe, though the actual population of the whole United States does not equal one tenth part of that number. If we add the tropical and southern portions of the great American continent, and then go to the antipodes to look at Australia, the area of which does not fall far short of that of all Europe, — if we consider what an insignifi- cant fraction of these vast regions is yet tenanted by civilized man, — we are obliged to give up our statistical calculations in despair ; the imagination fails to grasp the possible number of human beings whom the earth might support, or the number of years that must elapse (judging from the world's history thus far) before this extent of space can be fully peopled, and there can be a just call for room. THE MALTHUSIAN THEORY OF POPULATION. 137 Till this limit is approached, — that is, for several centuries yet to come, — every birth adds something, or might add something, to the possible surplus of food. If there are more mouths to feed, there are more hands to feed them with ; if there is more work to be done, there are more laborers to do it. It is demonstrable that, since the labor of one person upon the soil must produce more than is necessary for his own subsistence, the more hands there are employed in agriculture, the greater will be the surplus for those engaged in other occupations. That the surplus will not in- crease in the same ratio with the number of agricultural laborers, is a fact of no importance ; before the growth of the Population can be checked by absolute deficiency of food, there must cease to be any surplus, and the earth must not yield enough even for the subsistence of him who cultivates it. We may have as much dread of this contingency as of the sun's expending its whole stock of light and heat, or of there being no salt left in the sea. Ireland is an instance directly in point to bring the doctrine of the Malthusians to a test. They say that the island is over- peopled, and that their excessive number is the cause of the wretchedness of its inhabitants. But in ordinary years, Ireland not only supplies food for her whole Population, but her exports of the cereal grains alone amount to five millions sterling, and of meat, butter, and cheese to at least half as much more. It is absurd, then, to say that the Population is here pressing against the means of subsistence ; and if the doctrine does not hold true in this case, to what country in the civilized world is it- applica- ble 1 Another view of the matter leads to the same result. If the land were parcelled out, and the same modes of cultivation pursued, in Ireland as in the Netherlands, the former country being naturally far the more fertile of the two, it is demonstrable that the soil would furnish abundance of food for twenty-six mil- lions of inhabitants, instead of supporting, as it now does, little over five millions and a half, of whom, a few years ago, one half were on the brink of starvation. Barbarous, and even half-civilized, nations, it is admitted on all hands, are in no danger of multiplying too rapidly ; the law of a geometrical progression is not applicable to them ; they do not increase, but decrease. The aborigines of a country, wherever they come in contact with civilization, melt away as ice and snow 138 THE MALTHUSIAN THEORY OF POPULATION. do at the approach of summer. So it has been with the Indians of our own continent, with the natives of Australia, the Hotten- tots of South Africa, the Moors of Barbary, and the natives of the Pacific isles ; and so it must always be. War, disease, vice, and ignorance, which are necessary accompaniments of the savage state, are destructive of human life ; they do not allow the Population to increase ; they seldom permit it to hold its own. Go a little higher in the social scale, and this result is but little modified. The Turks, the Arabs, the Tartars, the Hindoos, are probably not so numerous as they were a century ago. The countries which now form Turkey in Europe and Turkey in Asia were more popu- lous, two or three thousand years ago, than they are at the present day. The wasting away of such tribes may be, in some cases, the consequence of a deficiency of food ; but it is certainly not the result of over-population ; for the civilized men who come to occu- py their places obtain from the same soil abundance of food for a Population larger than theirs by twenty or a hundred fold. The bounty of Providence is not exhausted, but men do not make proper use of the means that are within their reach for satisfying their bodily wants : it matters not whether they leave much of the soil untilled, or send a large portion of its product out of the country while millions are famishing at home. Civilized nations, let them multiply as fast as they may, do not devote their attention chiefly, or even in great part, to the supply of food, but to the acquisition of wealth. Exchangeable value in general, not the means of subsistence even in particular, is the object of their endeavors. What matters it to me, that my neigh- bor owns and cultivates a large extent of fertile land while I do not own a square foot, — provided that I have plenty of money in my purse 1 With that money, I can purchase food of my neigh- bor; I can even lay the fertility of both Indies and of the farthest corners of the earth under contribution to supply my personal wants. Communities and nations act, in this respect, just like individuals. If it be more profitable to them to devote their arable lands to other purposes than those of husbandry, they will do so without hesitation, being confident that they will be sup- plied with food from other lands. The inhabitants of Barba- does, with a soil abundantly capable of supplying their wants, actually devote all their ground and labor to the cultivation of THE MALTHUSIAN THEORY OF POPULATION. 139 sugar, cotton, and a few tropical products,, which they export; while they import all their provisions, their wheat, pickled fish and salted meat, butter, cheese, etc., from the United States. They do not, on their own ground, raise food enough for the hundredth part of their own consumption. What they do almost exclusively, all commercial and manufacturing communities do to a certain extent. They devote their energies to getting wealth, and buy food whencesoever it may come to them, being careless whether it is raised in their own" or in foreign lands. Since the abolition of the corn laws, and of other oppressive charges in the British tariff, the market price of the chief articles of provision is hot, and cannot be, ten per cent higher in Liverpool than in Boston ; and the supply of these articles (which is the only point that we need consider here) is just as abundant in the for- mer place as the latter. The farmers of Ohio, Wisconsin, and Iowa would rejoice at an opportunity to supply England and Ireland with all the wheat that they require. A failure of the English crops, or a multiplication of the English people, is certain- ly no misfortune to us, though we have to supply the food which in that case becomes necessary. Is it then a misfortune to the English, — a misfortune, I mean, of such a character as to justify them in complaining of the ways of Providence for sending more human beings upon the earth than the earth is capable of support- ing 1 It is a calamity, unquestionably, in regard to the acquisition of wealth; for the necessity of buying so much food diminishes their store of wealth. But it is not a calamity in regard to the supply of food, or to the limited extent and fertility of the earth's surface. Man, not Providence, is in fault. Great Britain is obliged to buy all her cotton, an article of almost as universal con- sumption as wheat ; yet this fact, being one to which she is -ha- bituated, is not made a subject of complaint. Cotton, however, can be produced to advantage only in a few regions, of compara- tively limited extent ; while the cereal grains can be raised over three fourths of the surface of the habitable globe. Should a new process of agriculture be discovered, by which cotton could be grown throughout England with so much facility and profit that the yearly returns of the farmer from it would be twice as great as from wheat, it is very certain that no wheat would then be raised on English ground, and yet there would be no deficiency in the 140 THE MALTHUSIAN THEORY OF POPULATION. supply of that necessary article. In this case, she would raise her cotton and buy her wheat ; now, she raises her wheat, and buys her cotton. We can now see with sufficient distinctness the two great facts which afford a complete refutation of Malthusianism. The first is, that the limit of Population, in any country whatever, is not the num- ber of people which the soil of that country alone will supply with food, but the number which the surface of the whole earth is capable of feeding ; and it is a matter of demonstration, that this limit can- not even be approached for many centuries. The inability of Eng- land alone, or of Ireland alone, to supply her teeming population with food, is a fact of no more importance in the world's economy, than the inability of the city of London alone to supply her two millions of people with farm-produce from her own soil. Lon- don taxes all the counties of England for sustenance ; England taxes all the countries of the earth for sustenance ; — I cannot see any difference between the two cases. Then, secondly, I say that the practical or actual limit to the growth of Population, in every case, is the limit to the increase and distribution, not of food, but of wealth; and it is certain that, in every civilized country, the increase in the number of its inhabi- tants is attended by a more than proportionate increase of its wealth. Among civilized men in modern times, a famine is created, not by any absolute deficiency in the supply of food, but because the poorer classes have no money to buy it with. As every hu- man being is an implement for the production of wealth, a means of enlarging the aggregate national product or the amount of ex- changeable values belonging to a nation, the increase of Population is not a cause of scarcity of food, but a preservative against it. It makes no difference whether the mass of the people are engaged in hammering iron, spinning cotton, or raising wheat ; for the product in each of these cases either is food, or is exchangeable for food, which amounts to precisely the same thing. Commerce distributes equally all products for which there is an equal de- mand. Our crops did not fail in 1847 ; but the price of grain, in our seaport towns, and even in our back country, rose in as great proportion as in Ireland and Scotland. But all classes of our peo- ple were still able to buy the grain, even at the advanced price ; while one half of the Irish people, and perhaps one sixth of the THE MALTHUSIAN THEORY OF POPULATION. 141 Scotch, were too poor to obtain it at this price, and therefore they hungered, and very many of them died of starvation. This is the true explanation of the famine of 1847 in the British Isles. The march of civilization, the extension of trade, the facili- ties of transport, and the consequent ease of supplying the failure of the crops in one country by the superabundance of the harvest in another, have made the recurrence of a proper famine, in mod- ern times, impossible. By a proper famine, I mean such an abso- lute deficiency of food, and impossibility of obtaining it on any terms, as is suffered by the garrison of a besieged town, or by the crew of a wrecked ship. It is not in the scheme of Providence, as hitherto revealed to man, that harvests should fail all the world over at the same time, or even for the failure to be so general that the aggregate product should not suffice, — perhaps with some scrimping and some hardship, — for the aggregate want. No civi- lized nation, either in the Old or New World, ever fears an abso- lute deficiency of food : its fields may be unfruitful for a single season ; but, in such case, it looks with well-founded confidence to its neighbors, and even to remote parts of the earth, for a supply. In 1847, the bounty of Providence to the British Isles did not fail; shiploads of corn were turned away from their shores for want of a market. The granaries of the two islands were filled to overflow- ing, not indeed from the products of their own harvests, but from the immense supplies poured into them by our ever teeming land. Flour and meal became a drug in the English market before a sheaf of that year's wheat was cut, and many dealers in grain were bankrupted by the consequent sudden reduction of prices. The fate of the Irish and Scotch appeared the more terrible, because they starved in the midst of plenty. They died, not because the fields were cursed' with barrenness, but because they had not wherewithal to buy food. The price of breadstuffs did not become more than double its average in ordinary years, — did not rise so high, by one third, as in 1800 and 1801 ; and in those years, though there was scarcity, there was no famine. The year 1847 witnessed a frightful anomaly, which will long be remembered as a disgrace to modern civilization, — a famine of which poverty was almost the sole cause. A fallacy pervades the whole reasoning of the Malthusians on the relation of the supply of food to the growth of the Population. 142 THE MALTHUSIAN THEORY OF POPULATION. More grain is raised became there are more men who need it; and not more men are raised because there is more grain to feed them with. Procreation is not stopped because there is no more grain; since misery and the peril of starvation only make men reckless, and cause them to multiply faster. But agriculture is stopped when there are no more mouths calling for food ; a cessation of De- mand causes a cessation of Supply here, because the husbandman is looking only for pecuniary gain. But in the case of Population, a want of Demand does not occasion a want of Supply ; since men are urged by their natural inclinations, and not by the state of the children-market, or by the desire of profit. They do not always marry because they want children, but because they want a wife. It is true, that the call for more food, which is created by an ex- cess of numbers, will not be an effectual calling unless the people have the means to purchase it with; but these they will never lack if the wealth of the country is distributed according to the natural course of things, — that is, in exact proportion to the in- crease of each family, all the children sharing alike. At any rate, if the demand be rendered ineffectual from this cause, the real evil, the real check upon the Population, is not the insufficient supply of food, but the want of property. Turn the matter as we may, it is not the niggardliness of nature which is the source of misery, but the devices of man and the injustice of his laws. In truth, it is demonstrable both from reason and experience, that Population never can rise to the point where it will meet this last and insuperable obstacle, — the absolute inability of the earth to contain and support more. Among the immediate evils to be first removed are ignorance, vice, bad government, and a virtual division of society into castes through unnatural, yet fixed, in- equalities of wealth and condition. Take away these, and you will remove along with them the widely spread misery which they foster, and which is the great cause why Population multiplies unduly, o*r under circumstances that are not fitted for it. Hope- less misery renders men imprudent and reckless, and leads them to burden themselves with a family, though they are already starving, because they cannot be worse off, and there is no hope of improving their estate. To adopt the phraseology of Mr. Malthus, take away the Positive check, and the Preventive check will come into play of its own accord, — will come into play as the THE LAW OF POPULATION. 143 easy, beneficent," and necessary result of the laws of nature and nature's God. Whatever tends to keep men hopelessly poor is a direct en- couragement, the strongest of all incentives, to an increase of Population. Take away the causes of misery, remove the insur- mountable barriers which now keep the various classes of Euro- pean society apart, and educate the people, — and there will be no fears of an excess of numbers. Take away the lower weights which keep down the spring, and the lever will never rise high enough to meet the upper check. *The bounty of Providence never fails. It is not the excess of Population which causes the misery, but the misery which causes the excess of Population. The Malthusians say that the rise of wages encourages marriages among the poor, and thus augments the distress. On the con- trary, it is the fall of wages which, by inducing recklessness and despair, causes the poor to multiply faster. Having considered the doctrine of Malthus, let us now examine the true theory of Population, by inquiring into the circumstances which govern its increase and distribution. The law which regu- lates the increase of numbers in a civilized society is not hard to find, though it is difficult to express all the modifications that it undergoes from a change of circumstances. The consideration which affects most strongly the inclination of people to labor and to save, and thereby furnishes the chief stimulus for the accumu- lation of capital, also regulates in a great degree their tendency to increase in number. It is natural that it should be so : other things being equal, a man's condition as married or single, and the size of his family, are decisive of his worldly fortune. If his ambi- tion is awakened by a fair prospect of obtaining wealth and rising in society, he will become prudent not only in his expenditures, but in contracting any relations which may become a burden to him, — which may impede his efforts to rise, and may even tend to depress him in the world. In a normal state, then, the inclina- tion of people to marry is controlled by their opinion of the effect which marriage will have upon their position in life. The eldest son in a wealthy family, where the right of primo- geniture prevails, will marry, because his future is secure: what- ever may happen, a fortune is secured to him against the effects even of his own imprudence. The miserable laborers on his es- 144 THE LAW OF POPULATION. tate, who do not taste meat more than once in a month, will marry because their future is secured in another way. They have touched bottom ; nothing can sink them in the world, and no degree of prudence or self-denial can ever raise them above a laborer's estate. Their children, it is true, may starve, or die of diseases induced by insufficient or improper food. But excessive misery creates recklessness and despair ; they who have no hope or fear cannot be expected to deny themselves the only alleviation of wretchedness of which their state is capable. The younger sons in noble* or wealthy families, if the patrimony falls exclusively to the eldest, generally remain single, or marry late in life, as an early connection of this sort would be certain degradation ; at any rate, they could not maintain the style of living to which they have been brought up. Now, as the marriage of only one person out of a family cannot do more than keep up the number in Ihe class to which they belong, and often may not effect even that, these families constantly tend to die out ; and if it were not for promotions to their rank from the middle classes, the upper orders of society would gradually disappear. Of the 216 Barons who sat in the English House of Lords in 1854, the peerage of all but 30 had been created since 1711 ; and 127, or considerably more than half of the whole number, had been ad- mitted to the peerage since 1800. Koyal families are still more prone to die out than the families of noblemen; from the line of succession to the English throne, the families of the Plantagenets, the Tudors, and the Stuarts have already disappeared ; and the house of Brunswick, saving that branch of it the title of which is transmitted through a female, exists by a very slender tie, and will probably soon be extinct. The history of the Bourbons and sev- eral other royal families in Europe is of a similar character. But the principle is, perhaps, most strikingly exemplified among the landed gentry of England, whose continued and increasing opu- lence is chiefly to be attributed to this cause ; for the diminution of their numbers, of course, tends to the concentration of their estates. In the order of Providence, there is a natural check to the excessive accumulation of property in the hands of a few, and to the consequent debasement and misery of the multitude. This natural corrective, when not counteracted by unwise laws, tends THE LAW OF POPULATION. 145 effectually to equalize the distribution of wealth, so that not many- persons can be brought to extreme destitution, except by their own obvious fault. This check exists in the very circumstance to which the English Political Economists are fond of attributing the whole evil, — the natural multiplication of the human species. Property in the hands of an individual unquestionably tends to accumulate ; one who has both money and industry can make greater gains than one who depends on industry alone. But, from the short- ness of human life, an individual can hold this property only for a brief period of years. When he dies, it descends to his off- spring ; and by the law of nature, as they are all equally near to him, it is equally divided among them. When this law is not abrogated by human legislation, — that is, where the right of primogeniture and laws of entail do not exist, — it causes so fre- quent a distribution of estates as effectually to overcome the tendency of capital to accumulate, or to continue in a single line of heirs. * No sooner is wealth heaped up than it is parcelled out again, and a constant circulation is thus maintained, which sends the life-blood of capital into every part of the body politic. The faster the Population increases, the more rapidly does this corrective of the accumulation of property operate ; for the greater the num- ber of heirs, the more minute is the division of the parent's wealth. In the intermediate conditions of life, the frequency of mar- riages stUl depends on the same rule, though its operation is affected by the general circumstances of the country, and by the particular position of individuals. In a newly settled region, chil- dren are a help to the parents' advancement, because labor is so valuable ; hence the rapid advance of Population in the frontier States of our own Union, — an advance which immigration alone does not account for, though a considerable part of it is certainly attributable to this latter cause. In a more thickly populated country, children are a hindrance, from the difficulty of establish- ing them in an equal position of life with their parents. But even in this ease, those who are in easy circumstances will marry, while those who can but just maintain themselves in the condi- tion of life in which they were born will often remain single. This last case is that of the peasantry of many countries of Continental Europe, who cultivate their own little farms, and are perpetually admonished by the moderate size of their properties, that any in- 10 146 THE LAW OF POPULATION. crease of their number must lead, not indeed to starvation, but to the forfeiture of their position as land-owners. Thus, in Switzer- land, which is, in the main, a country of small proprietors, the Population increases so slowly, that, at its present rate, it is esti- mated that it would not double itself in less than 227 years. In France, where also the land is cut up into very small estates, but where the peasantry are less prudent, less disposed to make calcu- lations respecting the future, than the Swiss, the estimated period of duplication varies from 115 to 138 years. The general effect in the Old World, then, may be thus stated, — that the numbers of the poor increase most rapidly, of the middle classes more slowly, and of the upper or wealthier ones, either not at all, or so slowly as hardly to be perceptible. "By a singu- lar anomaly," says Alison, "the rapidity of increase is in the inverse ratio of the means which are afforded of maintaining a family in comfort and independence. It is greatest when these means are least, and least when they are the greatest.* This is strikingly illustrated in Sweden, where the census and the regis- tration of births, deaths, and marriages are taken with reference to the division of the people into three classes. The official returns for 1835 give the following results: — The yearly excess of births over deaths among the persons reckoned as belonging to the nobility was only one for every 1,508. For those who are described as " persons of property and station," the yearly ex- cess was one for every 640 ; while for the peasantry it was one for every 107. In other words, the rate of increase for the peas- antry is nearly six times greater than that of the middle class, and over fourteen times greater than that of the nobles. Thus do the laws of nature itself operate against a permanent or hereditary aristocracy. If we compare different .countries with each other, we still find, in every case, that the lowest classes increase most rapidly, and that the rate of increase diminishes as we ascend in the social scale. But we also observe that this law becomes more prominent and conspicuous according as these social distinctions are more fixed and unalterable, — that is, as they approach the nature of castes ; and also, it becomes more marked in proportion to the de- gree of poverty and wretchedness of the lowest class. Thus, we can discern the operation of the law even in this country; where THE LAW OF POPULATION. 147 it. is matter of common observation, that laborers, mechanics, small tradesmen, and farmers generally marry at an early age, and have la*ge families ; while educated men, members of the profes- sions, and sons of wealthy parents often defer " establishing them- selves in life,'' as the phrase goes, till a comparatively late period. But owing to the general well-being of all classes here, and to the frequency and rapidity of transitions from one class to another, these differences are less obvious than in the Old World. In France, where the land is minutely divided, and the peasan- try are vastly better off than in England, the rate of increase of the population, for ten years, is only 5 per cent ; in England it is 15 per cent ; and in Connaught, the sink of Irish misery and degradation, from 1821 to 1831, it was as high as 22 per cent. In the province of Ulster, the rate is 14, while in the county of Donegal it rises to 20 per cent. "And this is precisely the county which official reports represent as forming an exception to the general condition of Presbyterian Ulster, and affording an instance of poverty little less extreme than that of Connaught. In the latter province, we find Galway and Mayo, notoriously the two most destitute counties, exhibiting, the one an increase of 27, and the other of 25, per cent." Excluding the effects of emigra- tion, this rate is nearly as high as in the United States ; so that the two extremes, of general misery and general well-being, produce very nearly the same effect on the movement of the population, — ■ a fact utterly irreconcilable with the theory of Malthus. The probable result for our own country may now be very clearly seen. So long as land continues abundant and cheap, and the wages of labor high, so long the Population will continue to increase with great rapidity. Barbarous tribes will die out before its advancing wave, and the desert will be peopled. But as the country fills up, and the wages of labor fall, it will become more difficult to rise from one class of society to another, and the rate of increase will diminish. When the land becomes as thickly settled as Belgium now is, — a result which centuries will be re- quired to accomplish, — the Population will advance as slowly as it now does in Belgium. I see nothing in this prospect which need alarm even those who are most apt to be apprehensive of the future. Mr. Senior has very happily illustrated the truth, that the 148 THE LAW OF POPULATION. Preventive t!heck upon marriages is the fear, not of lacking the necessaries of life, or of positive starvation, but of being deprived of those comforts and enjoyments which custom has marked out as appropriate for every condition in life, or every rank in the social scale. " Though an apprehended deficiency of some of the articles of wealth is substantially the only Preventive check to the increase of Population, it is obvious that fear of the want of different arti- cles operates, with all men, very differently ; and even that an apprehended want of the same article will affect differently the minds of the individuals of different classes. It appears to us, therefore, convenient to divide for this purpose the articles of wealth into the three great classes of Necessaries, Decencies, and Luxuries, and to explain the different effects produced by the fear of the want of the articles of wealth falling under each class. It is scarcely necessary to remind our readers that these are relative terms, and that some person must always be assigned with reference to whom a given commodity or service is a Luxury, a Decency, or a Necessary. " By Necessaries, then, we express those things, the use of which is requisite to keep a given individual in the health and strength essential to his going through his habitual occupations. " By Decencies, we express those things which a given individual must use in order to preserve his existing rank in society. " Everything else of which a given individual makes use, or, in other words, all that portion of his consumption which is not essential to his health and strength, or to the preservation of his existing rank in society, we term Luxury. " It is obvious that, when consumed by the inhabitants of dif- ferent countries, or even by different individuals in the same country, the same things may be either Luxuries, Decencies, or Necessaries. Shoes are Necessaries to all the inhabitants of Eng- land. Our habits are such, that there is not an individual whose health would not suffer from the want of them. To the lowest class of the inhabitants of Scotland, they are Luxuries ; custom enables them to go barefoot without inconvenience and without degradation. When a Scotchman rises from the lowest to the middling classes of society, they become to him Decencies. He wears them to preserve, not his feet, but his station in life. To THE LAW OF POPULATION. 149 the higher class, who have been accustomed to them from infancy, they are as much Necessaries as they are to all classes in Eng- land. To the higher classes in Turkey, wine is a luxury and tobacco a decency ; in Europe, it is the reverse. The Turk drinks and the European smokes, not in obedience, but in opposi- tion, both to the rules of health and to the forms of society. " The question, whether a given commodity is to be considered as a Decency or a Luxury, is obviously one to which no answer can be given, unless the place, the time, and the rank of the individual using it be specified. The dress which in England was only decent a hundred years ago, would be almost extravagant now; while the house and furniture which now would afford merely decent accommodation to a gentleman would then have been luxurious for a Peer. The causes which entitle a commodity to be called a Necessary are more permanent and more general. They depend partly upon the habits in which the individual in question has been brought up, partly on the nature of his occupa- tion, on the lightness or the severity of the labors and hardships that he has to undergo, and partly on the climate in which he lives. The fuel, shelter, and raiment, which are essential to a Laplander's existence, would be worse than useless under the tropics. And as habits and occupations are very slowly changed, and climate suffers scarcely any alteration, the commodities which are necessary to the different classes of the inhabitants of a given district may, and generally do, remain for centuries un- changed, while their Decencies and Luxuries are continually varying. "Among all classes, the check imposed by an apprehended deficiency of mere Luxuries is but slight. The motives, perhaps we might say the instincts, that prompt the human race to mar- riage, are too powerful to be much restrained by the fear of losing conveniences unconnected with health or station in society. Nor is Population much retarded by the fear of wanting merely Neces- saries. In comparatively uncivilized countries, in which alone, as we have already seen, that want is of familiar occurrence, the Preventive check has little operation. They see the danger, but want prudence and self-denial to be influenced by it. On the other hand, among nations so far advanced in civilization as to be able to act on such a motive, the danger that any given person 150- THE THEORY OF RENT. or his future family shall actually perish from indigence, appears too remote to afford any general rule of conduct. " The great Preventive check is the fear of losing Decencies ; or, what is nearly the same, the hope to acquire, by the accumu- lation of a longer celibacy, the means of purchasing the Decencies which give a higher social rank. When an Englishman stands hesitating between love and prudence, a family actually starving is not among his terrors ; against actual want, he knows that he has the fence of the poor-laws. But however humble his desires, he cannot contemplate without anxiety a probability that the in- come which supported his social rank while' single may be insuffi- cient to maintain it when he is married ; that he may be unable to give to his children the advantages of education which he en- joyed himself; in short, that he may lose his caste. Men of more enterprise are induced to postpone marriage, not merely by the fear of sinking, but also by the hope that, in an unencumbered state, they may rise. As they mount, the horizon of their ambi- tion keeps receding, until sometimes the time has passed for realizing those plans of domestic happiness which probably every man has formed in his youth." CHAPTER IX. THE THEORY OP RENT. Rent is the compensation paid to the landlord for permission to hold and use a certain portion of land. As the real ownership is sometimes divided between several parties, — for instance, between the government, the nominal landlord, and the occupier, — several sorts of Rent have come to be distinguished from each other, and called by different names. Moreover, Rent was not always paid in money, but sometimes by rendering military services, sometimes by performing menial or agricultural labor, and sometimes in kind, — that is, by a given portion of the actual products of the soil. A fixed charge payable annually forever, without regard to the greater or less productiveness of the soil, is more properly consid- ered as a case of coproprietorship than of Rent ; the owner of one THE THEORY OF KENT. 15% undivided fourth of the property, for instance, instead of receiving each year one fourth of the net annual product, whatever it may be, may have this share commuted into a fixed sum payable annu- ally forever, such payment being then called a Bent-charge. So, also, when the government is sole owner or a coproprietor of the soil, what it annually receives is more properly regarded as a tax, than as Rent. A land-tax not liable to be altered in amount — and such is the case with the land-tax in England — is properly a Kent-charge. A quit-rent is a fixed sum, — usually but a small part of the net annual product, — annually paid by the possessor, as one of the coproprietors, to his feudal lord as the other coproprietor. It is so called because it quiets the claim of the lord, or makes the occupier quit of him. The labor, whether fixed or indeterminate in amount, due to the lord from servile cultivators of the land, might be called a serf-rent, as it was really a compensation for the serfs tenement or holding of ground, or for his right of subsistence on the estate to which he was attached. Metayer rent is a divi- sion of the actual products of the farm between the cultivator and the land-owner, such as is practised in Tuscany and other portions of southern Europe ; it corresponds to our New England mode of letting a farm " on shares." Rack-rent is the largest sum that can be obtained for the annual hire of the land, when it is offered to tenants in free competition, as by auction. Cottier rents are paid in Ireland by peasant farmers, who hire small patches of land, each being barely sufficient" for the subsis- tence of a single family ; and even these small parcels of land, except where the custom of tenant-right prevails, are usually rack- rented. The conacre is a patch of land already manured, which the Irish agricultural laborer is allowed by the farmer to cultivate for the season, on paying therefor a Bent of several pounds an acre, this Rent being worked out in labor at a money valuation. Ryot-rent is the portion of the annual product which, in India, is paid by the peasant cultivator to the sovereign, as the proprietor of the ground. Farmer-rent, which is the usual meaning of the word rent in England, is the covenanted annual sum paid to the land- lord by one who furnishes all the capital, and employs all the laborers, for cultivating a tract of land varying in size from a dozen, up to two or three thousand, acres. It should be added 152 THE THEOEY OF SENT. that, in England, the word farmer means one who pays Rent for the land that he cultivates ; while, in this country, it means one who cultivates his own land. Ground-rent is paid in cities and towns for building-lots, when mere space" or room is wanted, the quality of the soil being a point of no importance. The supposition, which is the basis of Ricardo's theory, that the occupier is free to remove from bad to good, or from dearer to cheaper land, is true only in a few of these cases of Rent. In forming his theory, Ricardo had almost exclusive reference to the farming system of England, and regards the farmer as a capitalist who looks only for a due return of profits upon his investment. From the whole sum paid to the landlord, he deducts ordinary profits on all the capital ever laid out in permanent improvements on the land ; and the remainder he considers to be Rent properly so called. According to this view, Rent is what is paid for the original and inherent powers of the soil, before any capital is laid out upon it, or any labor bestowed on its cultivation. But in the case of most farming-land, it may be doubted whether, after such a deduction of profits, there would be any remainder ; that is, in Ricardo's sense, whether the land yields any Rent. Ordi- nary tillage-land may be regarded as originally nothing but a matrix for the investment of labor and capital. Reckoning up the whole cost of first clearing the gro\md, draining it, carrying off rocks and stones, transporting to it soil and mineral manures, fencing it and planting trees, building farm-houses, etc., it would probably be found that ordinary profits on the total of these ex- penditures would absorb the whole sum now paid annually for the use of the farm. But the theory in question needs to be explained and tested at greater length. The entire science of English Political Economy may be said to be built upon three leading theories ; — that of Adam Smith con- cerning Free Trade, that of Malthus in regard to Population, and that of Ricardo in regard to Rent. They are intimately con- nected with each other ; and a full appreciation of the mixture of truth and falsehood which they contain would tend to clear the science of its local, English character, and to fit it for universal acceptance and utility. Having considered the first incidentally, and the second at some length, we may pass to an examination of Ricardo's doctrine. THE THEORY OF KENT. 153 The permanent or average value of everything not limited in quantity depends on its Cost of Production, that is, on the amount of labor required to produce it. But the Cost of producing some commodities cannot always be reduced to the same uniform standard : a few persons may enjoy certain facilities, some peculiar implements or patented machinery, which other persons cannot, obtain, and by the aid of which they can produce the article at less cost, or with a smaller amount of labor. They cannot, how- ever, thus produce enough to satisfy the whole Demand ; and therefore, other persons must produce some at the expense of more labor. In such a case, the Price of the commodity will be deter- mined by the cost of that portion which is produced ivith the greatest difficulty ; for, unless the Price indemnified these producers, they would give up the business, and the necessary amount of the arti- cle could no longer be had. But the Price having risen to this point, the persons producing the article more easily, by the aid of a machine or implements of which they have a monopoly, would receive an extraordinary profit. This whole extra profit may be called^ Rent, a phrase which obviously includes the profits of a patentee of a useful machine, as well as those of a landholder. If the-land or the machine were not subject to monopoly, — if it did not have a scarcity-value, — no Kent would be paid for the use of it, any more than for the use of the ocean. The produce of land, according to Ricardo, is obtained under circumstances precisely analogous to those here supposed. The supply of grain or cattle may be indefinitely increased, by employ- ing more capital and labor ; but it cannot always be increased in the same proportion to the capital and labor expended. In the manufacture of cottons, woollens, and silks, double the capital, and you will usually double the amount produced. But in agriculture, this is not the case. The most eligible- land is first taken up, — either that which is most fertile, or that which is nearest to mar- ket, or both. We will call this portion land of the first class. For a while, this produces enough to satisfy the demand. But as the Population increases, more grain is called for ; and, because there, is no more land of the first class to be had, the producers are obliged to take land of the second class, either that which is less fertile, or farther from market, or both ; the demand having pre- viously outrun the supply, the Price has risen enough to remu- 154 THE THEORY OF RENT. nerate them for employing capital and labor on this less promising soil. For a while, this additional supply suffices ; but then Popu- lation again advances, the demand for food is increased, the Price rises again, and as a necessary consequence, land of the third class is brought into cultivation. And so on, indefinitely. At each step, there is a necessary enhancement of Price, and therefore of Profit, to those who work the land of higher quality, or of more easy access. The Price of the grain and cattle which are brought to market must always be high enough to pay those who work the poorest land in use ; otherwise, they would quit the employment, and the land would fall out of cultivation. But this Price, of course, will give a larger profit to those who hold the land of the next higher class, and a still larger one to the owners of land of the first class. And as still inferior lands come into use, these profits must become yet larger. The result is, that the amount of Rent for land must always depend on the degree of superiority of that land over the least fertile, or least eligible, ground which is cultivated at all, and which, because it is the poorest, yields no Rent at all. By the original constitution of nature, land is of various degrees of productiveness. One acre, with a certain quantity of labor be- stowed upon it, will yield forty bushels of wheat ; another acre, with the same amount of labor, will yield but thirty bushels ; a third acre, still requiring the same labor, gives but twenty bushels. Now, suppose that these three acres of land constitute the whole stock of a family of persons living upon an island of this extent, and cut off from intercourse with the rest of the world by the in- tervention of a wide waste of ocean, and by their lack of ships or boats. If this family consisted of but five persons, we may sup- pose that one acre would furnish them grain enough, and, of course, they would choose the most productive land. There being land, of this quality, enough for all, no portion of it would yield any Rent. But if three persons should be added to their number, there would be a necessity of cultivating the next best acre of land ; and to the persons undertaking to cultivate it, it would amount to the same thing whether they took without Rent the land yielding thirty bushels to the acre, or paid a Rent, equal in value to ten bushels of grain, for the land producing forty bushels to the acre. THE THEORY OF KENT. 155 The increase of Population, then, rendering it necessary to have recourse to land of inferior fertility, would cause land of the first class to pay Rent ;. and this Rent would be exactly proportioned to its degree of superiority over the worst land in cultivation, which yields no Kent. A farther accession of three individuals would oblige the community to till the third acre, which yields but twenty bushels ; and one might have his choice between tak- ing this land without Rent, or paying ten bushels a year for land of the next best quality, or twenty bushels a year for the most fertile spot. Always the worst land in cultivation pays no Rent ; and all other land pays Rent in proportion to the degree of its superiority over this poorest land. Natural fertility is but one of the circumstances that give value to land, or cause it to pay Rent ; nearness to market, or any other natural quality, operates in precisely the same way. If all the land produces the same quantity to the acre, and if the pro- duce of one acre can be sold ou the spot, while it costs the value, of ten bushels of grain to carry the produce of the second acre to market, and of twenty bushels to transport that of the third acre, then the first acre will bear a Rent of twenty bushels, the second a Rent of ten bushels, and the third no Rent at all, because it produces only enough to pay ordinary Wages and Profits, — there is no surplus for Rent. The increased demand of towns, occasioned by the increase of their Population, not only tempts the cultivators in their vicinity to improve their lands more highly, but frequently causes large portions of their supplies to be brought from a great distance. Hence it sometimes happens that the advantage of vicinity more than counterbalances the dis- advantage of comparative barrenness, so that lands of inferior fertility, in the immediate environs of a large town, yield a con- siderable Rent, while much richer land, at a distance from good markets, yields little or perhaps no Rent. As vicinity to a town is a cause of Rent, so vicinity to a road, navigable river, or canal, by diminishing the expense of carriage to some great market, may have a similar effect. Observe, also, that the .theory still holds good, whether the increase of Population constrains us to take poorer or more distant land, hitherto neglected, into cultivation, or to expend more capi- tal and labor upon the land already in tillage, with a view of 156 THE THEORY OF KENT. increasing its product. For the additional capital thus invested will not yield a return proportionally great with that of the capital which was first employed.. If, for instance, the first thousand dol- lars spent upon a farm will cause it to yield at the rate of thirty bushels to the acre, the expenditure of a second thousand dollars upon it may raise the crop, perhaps, to forty bushels per acre ; but it certainly will not double the crop, or make the yield to be sixty bushels, as it ought to do if the second application of capi- tal were equally remunerative with the first. Then the second application of capital will not be made till the increase of Popula- tion has caused the Price of grain to rise so high, that this second thousand dollars will produce as large profits as capital applied in other ways. And when this second thousand dollars will yield ordinary profits, it is obvious that the first thousand dollars, ap- plied under circumstances much more advantageous, will yield much more than the ordinary profits. The difference between these two rates of profit is the Rent of the land. Thus, always, just as there are more mouths calling for more food, either poorer or more distant land must be taken into cultivation, or more capital must be applied with perpetually diminishing returns, or at rates of profit growing successively less and less. It is true, as the theory admits, that the necessity of having re- course to inferior lands, or of applying more capital with constantly diminishing returns, is postponed by the improvements that are made, from time to time, in the tools and processes of agriculture, which enable us to obtain more food from the same quantity of land without a proportionate increase of capital or industry. But the evil day is thus only postponed, not entirely removed. It is impossible that agricultural improvements should keep pace for any long time with the increase of the Population ; for they are limited in their nature and extent, while the prolific power of the human race is unbounded. These improvements also, by lessen- ing the price of food, stimulate the increase of numbers, and thus, in one way, tend to increase the evil, which they do but partially check in another. When the Price of corn is reduced, through improvements in agriculture, says McGulloch, " all classes obtain greater quantities than before in exchange for their products or their labor; hence the rate of profit, and consequently the accumu- lation of capital, are both increased ; and this increase, by causing THE THEORY OF KENT. 157 a greater demand for labor, and higher wages, leads, in the end, to an increase of Population, and, consequently, to a further demand for raw produce, and an extended cultivation. Agricultural im- provements obviate, sometimes for a lengthened period, the neces- sity of having recourse to inferior soils ; still, however, their influence in this respect cannot be permanent. The stimulus which they, at the same time, give to population, and the natural tendency of mankind to increase up to the means of subsistence, are sure, in the long run, to raise prices, and, by forcing recourse to poor lands, Rents also." This is a brief, but, I hope, sufficiently clear and fair exposition of Ric'ardo's celebrated theory of Eent. I call it Ricardo's theory, though it was first promulgated by Dr. Anderson, of Scotland, as early as 1777. It then attracted hardly any notice, and was sub- sequently forgotten. It was afterwards rediscovered, almost si- multaneously, by Sir Edward West and Mr. Malthus, while Mr. Ri- cardo has most sucessfully developed it, applying it to the theory of Profits, and to the solution of many other problems in Econom- ical science. Malthus was certainly put upon the track of it by his own theory of Population, of which it is an obvious supple- ment. As it might be objected to the Malthusian doctrine, that the danger which it contemplated was prospective and distant, the world certainly not being overpopulated as yet in all its parts, this theory of Rent comes in to fill up the deficiency in our her- itage of woe, and to prove that the increase of Population, to which the human race is always tending, is always an evil ; — that, for every new life which is created, some new restraint, privation, or loss is imposed upon those already in being. " Granted," these prophets of evil may exclaim, " that there is not as yet an abso- lute deficiency of food ; yet every birth tends to raise the price of the stock of sustenance which we have, because it obliges us to cultivate still poorer land, and to apply labor and capital with constantly diminishing returns, — or to work at smaller Wages, and apply capital at smaller Profits." Mr. Mill states the legiti- mate inference from these two theories of Population and Rent clearly and strongly, when he says, that " a greater number of people cannot, in any given state of civilization, be collectively so well provided for as a smaller." I do not accept these gloomy views of the course of nature and 158 THE THEORY OF RENT. of Providence. I do not believe that any increase in the number of the civilized, Christian inhabitants of the earth is an evil, or that it entails any evil upon coming generations. The social evils which now unquestionably exist, and which are traced by such Economists as Malthas, Ricardo, and McCulloch, to an excess of population, appear clearly imputable to defective, unnatural, and unjust institutions of man's device, and admit of remedy without shaking the pillars of social order, or impiously calling on God to send war, inundations, or pestilence, wherewith to scourge man- kind into a sense of their duty to restrain their natural inclina- tions, and destroy the sources of domestic happiness. Having established these points against the doctrines and the calculations of Malthus, I proceed to show that there is nothing in this theory of Rent which ought to shake our confidence in them. And first, I would call attention to the fact, that both these theories are of English origin, and were first suggested, as is obvi- ous, by observation of those evils in the social condition of Eng- land, which only within the present century have become of crying magnitude. These evils have manifested themselves in the only country in Europe in which all the land, the great food-producing machine, has come to be owned by so small a class, that the great body of the community seem to have no part or lot in it ; while, at the same time, those ancient patriarchal and religious institu- tions, which certainly did much to mitigate the effects of an undue aggregation of landed property in the hands of a few, have entirely died out or been destroyed. It is the boast of the English, that the relations of vassal and lord, clansman and chieftain, serf and master, no longer exist among them. The English barons no lon- ger support each an army of retainers to be their followers in war, and to keep up their feudal state. English prelates and monks no longer dispense open-handed hospitality and charity at the gates of richly-endowed monasteries. These institutions of the Middle Ages have been destroyed in England, root and branch ; but their fall has not, as in many parts of the Continent, caused the landed property once aggregated in their support to be parcelled out again, with great minuteness and some approach to equality, among those who were formerly maintained by it in rude plenty, though not in peace or perfect freedom. Feudal relations have been done away, but the magnitude of feudal estates has not been THE THEORY OF RENT. 159 diminished. The Highland chieftain has banished his clansmen from their hereditary possessions and hereditary dependence on him, has compelled them to emigrate or starve, has turned his vast Highland estate into sheepwalks and deer-parks, and has him- self become a wealthy English nobleman. A cool pecuniary calcu- lation of profit and loss has induced him to take this step. The same motive has caused the great English landholders to depopu- late their estates, driving the rural tenantry into the towns and manufacturing districts, where they must become operatives or paupers. The consequence of this aggregation of landed estates, and this mode of deriving the largest possible Bent from them, has been a fearful increase of pauperism, and a general apprehension lest the tax for the support of the poor should become so large as eventually to beggar the rich also. Systems and theories of Political Economy suggested by cir- cumstances so anomalous and peculiar as these, or contrived with a view to explain and justify them, are not likely to be applicable to other countries, or to contain many general truths. England is the only country in the world in which the laboring class is en- tirely dependent on the wages of hired labor : on the Continent, in most instances, they have a small property on which they can sub- sist, though poorly, in seasons when they cannot add to their scanty incomes a small amount of Wages by obtaining employment elsewhere for time not needed at home. If they have not a little land which is entirely their own, they have a sort of pre- scriptive right to cultivate the land of others, on certain fixed terms, either as metayers, giving all the labor for a portion of the produce, or as feudal subjects bound to the soil, and having a right of maintenance from it. In neither case are they driven into the labor-market as their only refuge from starvation, there constantly to depress wages by their frantic competition for em- ployment, or to give up the struggle in despair by throwing them- selves upon compulsory public charity. Ricardo's theory of Rent was discovered or invented with ref- erence to the anomalous state of things in England. It is an attempt to establish as a law of nature the alleged fact, that an increase of the numbers of a people, under any circumstances, is an evil, because it creates an additional demand for food, which can be met only by having recourse to poorer or less advantageously 160 THE THEORY OF KENT. situated soils, or by applying more labor and capital, with constant- ly diminishing returns. It is abundantly confuted by facts, and can easily be shown to be unsound in principle. The assertion of Mr. Mill, " that a greater number of people cannot collectively be so well provided for as a smaller," becomes absurd when applied to an infant colony, established in a vast territory, on a virgin soil. Who can seriously maintain, that an increase of Population is an evil in British Australia, or in the great valley of the Missis- sippi ? It might as well be said that the people of Ohio, Indiana, and Wisconsin are straitened for want of room, as that their proportionate supply of food is lessened by the increase of their numbers. Among them, surely, it is apparent that an inprease of Population is an increase of productive power, and hence a pro- portionate increase of the surplus of grain and other articles of sus- tenance, which, after satisfying all their own wants in the amplest manner, they are able to send off to satisfy the wants of other nations. The average price of flour in the Philadelphia market, between 1800 and 1810, exceeded eight dollars a barrel ; from 1810 to 1820, the average was about nine dollars. The population of this country in 1800 was but little over five millions; in 1820, it was somewhat less than ten millions. It is now more than forty millions. And is the nation, in consequence of this vast increase of numbers, less bountifully supplied with food ? On the contrary, the price of flour and other breadstuff's has greatly diminished, and we are supplying the world with them. The average price of flour in 1869 was less than six dollars (in gold). Our export of breadstuff's and other articles of food in 1868 ex- ceeded 100 millions of dollars in value ; and in case of any failure of the crops in Europe, it could probably be raised to 130 millions, without materially lessening the enjoyments of the people of this country, or raising the price of grain to a point beyond the reach of the poorest class of the population. Do these facts afford any evidence that the forty millions, who now constitute the American nation, are not so well provided for as the five millions who occu- pied their place only seventy years ago 1 Are they not rather a demonstration of the principle that the increase of numbers is an increase of productive power, and a consequent proportionate in- crease of the means of subsistence, — of the necessaries, comforts, and luxuries of life 1 THE THEOEY OF, KENT. 161 But it may be said that America is an exceptional case, and that we have no right to argue from the fortunate circumstances in which we are placed to general conclusions which would be wholly inapplicable in other portions of the world. We answer, that the facilities afforded by commerce now really connect all the civilized nations of the earth into one great community, the supply of all articles being made everywhere proportionate to the demand and to the ability to pay for them. Grain and other articles of pro- vision are matters both of foreign and domestic traffic^ every country can obtain an abundance of them, though her own soil may be entirely barren. Great Britain has no difficulty in obtain- ing a supply of cotton, though the cotton-plant will not grow in the British Isles. Grain and other provisions can be purchased even with greater facility than cotton and tobacco, or coffee and tea ; for these latter articles can be raised only in a few favored countries, while the market of the whole world is open for the sale of food. It is found more profitable to devote the larger portion of the labor of the British Empire to commerce and manufactures, and to buy a portion of the food that is required, than to cultivate the soil to the full extent of which it is capable, and thereby raise the whole stock of provisions. If a given amount of labor employed in spinning yarn and weaving cloth will produce enough value to buy and import two bushels of grain, while, if devoted immediately to tilling the ground, it will raise only one bushel, it is certain that the labor will be given to manufactures, and not to agricul- ture ; and the deficiency of food thus created (if it can be called a deficiency) will afford no reason for impeaching the bounty of Providence, and no cause for fear lest the increase of the Popula- tion should outstrip the increase of the supply of food. We say, then, that this theory of Pient, being inapplicable and unsound in the case of America, is consequently untrue in its appli- cation to Europe generally, and even to England. An increase of the English population does create a larger demand for food. But this demand does not oblige the people to have recourse to the poorer soils in order to enlarge the crops, nor even to apply more capital with less profit to the soil already under tillage ; it simply cbliges them to import more food from America and the countries on the Baltic and the Black Sea. And the supply which these countries may afford is indefinite ; the only reason why they do 11 162 THE THEORY OF RENT. not now send more corn to England, is that England needs no more. The possible supply of wheat and maize from the back country of the United States defies all calculation; it is kept dammed up there now, because the producers know, if it were thrown upon the market at once, that it would sink the price below the cost of production. But, because it exists in excess, if the capacity of the market were increased the supply might be indefinitely enlarged, without any material or even perceptible enhancement of price. There is no more risk that our back country will be drained of wheat, than that the great Mississippi will drain it of water. Thus much for the contradiction of the theory by the facts in the case. The refutation of it in principle, or by abstract reason- ing, is equally easy. And first, it is to be observed that the natural fertility, or what Ricardo calls the original and inherent powers of the soil, as an element of Rent, are wholly insignificant in comparison with near- ness to market. The most barren soils in the world, even hard rock, pure sand, or stagnant marsh, should a populous and wealthy city spring up in the neighborhood, will yield Rent, often a large Rent, because they afford a field which human industry and skill can convert into a productive garden. On the other hand, soil of the greatest natural fertility, if it be far distant from any market for agricultural produce, will command no Price and yield no Rent. For instances of the former class, take the larger portion of the soil of Belgium and Holland, much of which has been literally re- claimed from the sea. Yet these broad districts of sea and sand are now the gardens of Europe, shaming even the wonders of Eng- lish farming by the fulness of their crops. Two and a half acres of them yield food enough for a family of five persons. For examples to corroborate the other branch of the statement, we have only to look at the remote West of our own fair land. Thousands of square miles of the most productive land in the world, in Kansas and Nebraska, are even now lying tenantless, because they will not command the government price of only $1.25 an acre. And even in the more thickly settled States of the great Mississippi valley, many a broad region yet remains waste in the ownership of the government, far superior in natural advantages to the soil of Belgium in its original condition, and for which, not- THE THEOKY OF KENT. 163 withstanding, no one will give this almost nominal price. The reason is, that there is not market enough in the neighborhood to take off the surplus agricultural produce. If the population should increase in numbers, so as to require more food, even though the price of the food should not be increased, this waste land would soon be purchased and reduced to tillage. This point being established, then, — that the original fertility of the soil is an element of little or no importance in the theory of Eent, — we have only to consider that portion of Eicardo's doc- trine which relates to comparative distance from the market. He maintains that land bears Eent in proportion to its nearness to the place where agricultural produce is needed and consumed ; and that the increase of population, consequently, is an evil, be- cause the community are obliged to send farther and farther off for their supplies. Here is the great and obvious fallacy, — of supposing that the population, as it increases, necessarily remains stationary, or on the same spot, so that the grain must be brought to it at a price enhanced by the cost of transportation. We answer, that, instead of the food coming from a distance to the pop- ulation, the population go to the food. The nation expands over more space as it increases in numbers. The tide of emigration sets towards the unoccupied lands in a current the velocity and depth of which are proportioned to the increase in the number of the people. The new-comers, the addition to the nation, instead of raising the price of food for themselves and their predecessors, actually cheapen it. As they spread themselves over the waste lands, and reduce them to cultivation, they not only raise food enough for themselves, but they increase the surplus which is sent to market, to be there exchanged for manufactures and the pro- ■ duce of foreign climes. This is exemplified in the recent history of New England. The average rate of increase of the population here, during the last forty years, has been less than 16 per cent for every ten years, while for the whole United States it has been about 34 per cent, or over twice as large. Why is this, since the excess of births over deaths is about as great in New England as in any other portion of the country'? The answer is obvious. One half of those who are born here, and survive to the age of maturity (one half of the surplus, I mean, over those who are needed to com- 164 THE THEORY OF KENT. pensate for the deaths), emigrate to the West, and there take their part in settling the wild lands and reducing them to tillage. And so successful have their labors been, that the price of grain and other agricultural produce has not risen in proportion to the in- crease of our numbers, as it ought to have done if Ricardo's the- ory were true, but has fallen since 1830, though since that time our population has been more than tripled, and though our exports of provisions also have increased to an immense extent. We come, then, to a theory of Rent which differs very widely from that of Ricardo. Rent depends, not on the increase, but on the distribution, of the population. It arises from the excess of the local demand over the local supply, and is therefore ultimately determined by the expense and inconvenience of bringing the food from a distance, or by the discomforts and privations which attend the removal of a portion of the people to a new home. The mi- gration is not necessarily directed to another country; the more remote and less populous counties or States may receive the sur- plus population of the metropolitan region and the manufacturing districts, and an additional supply of food will then be obtained from the agricultural labor of those who have thus found a new home. An increase in the numbers of the people may thus be followed by more than a proportional increase of the means of subsistence. The price of food, then, will not vary in proportion to the Rent ; on the contrary, the Rent may increase indefinitely while the price of food is diminishing. A livelihood may be more easily and cheaply obtained by commercial or manufacturing industry in a great city or a populous region, notwithstanding the considerable outlay required for Rent, than by tilling the ground in a district where land may be hired for a trifling sum, or even purchased at a nominal price ; and still the extension of agriculture may be so great, as the forest is cleared up and the prairie planted, that corn and flour may be bought by the inhabitants of cities more cheaply than ever. Not only in America, but in Great Britain and Ireland, and indeed throughout the civilized world, it is notorious that Rent is produced and increased, or, in other words, that value is given to the land, by creating a market for agricultural produce in the neighborhood of the land whence that produce is obtained ; that THE THEORY OF KENT. 165 is, by collecting a town or civic population, engaged in manufac- tures and commerce, who have the means to buy the wheat. By collecting such a population, I say; not by creating one, or by mak- ing the total number of the whole people larger, as Eicardo's theory requires. It is not the demand for a larger supply of food, but the altered locality of the demand, and the altered habits and occupations of the people, which swell the value of the land and enhance the Kent. And, conversely, the population might be considerably enlarged, and more food consequently be required, at the very time when Rents were falling throughout the country. This would be the case if the process of dispersion should be going on at the same time, • — the people leaving the manufacturing towns, and spread- ing themselves over the country, so that each family would come nearer the particular spot of land that feeds it. This is the evil often experienced here in America, where several towns and smaller cities upon the Atlantic coast, which were prosperous and wealthy up to the close of the war in 1815, have since ceased to advance, and even retrograded, in riches and population. Many of their citizens joined the great migration to the Western States, because the policy of the national government was no longer fa- vorable to manufactures, the fisheries, and commerce. Of course, as these towns dwindled, the value and the Rent of farms in their immediate vicinity were also depressed, and agriculture, instead of advancing, visibly retrograded, the prices of all kinds of rural produce being kept down by the abundant supplies which began to arrive from the newly cleared regions at the West. Yet, all this while, the total population of the United States was increas- ing with unparalleled rapidity, and, if Eicardo's theory were true, Rent ought to have advanced pari passu. To. illustrate the opposite result, — the rise of Eents and of the prices of agricultural produce produced by the concentration of the people in manufacturing districts and towns, — I might refer to such obvious instances as the neighborhood of Lowell in Massachusetts, Manchester in New Hampshire, Eochester in New York, Pittsburgh in Pennsylvania, and many others, the rapid and immense increase of which in population and wealth seems almost fabulous. It is the rapidity of this increase, indeed, which proves that the result is attributable to bringing the people together, and 166 THE THEORY OF RENT. not to the natural growth of the total population. It cannot have been merely from the increased number of births, that Rochester, for instance, which had a population of only 1,500 in 1820, num- bered over 9,000 inhabitants in 1830, over 20,000 in 1840, and over 36,000 in 1850 ; or that Lowell, whose population in 1830 was about 6,500, numbered over 33,000 in 1850. For illustra- tions from Great Britain, in which country alone does Ricardo's theory of Rent seem even plausible, I need only bring together a few passages from an able essay by a French writer, M. de Lavergne, on the " Rural Economy of Englaud." Up to the time of Arthur Young, he says, " the English farm- ers had, like all those of the Continent, worked with little view to a market. Most agricultural productions were consumed on the spot by the producers themselves ; and although in England more was sold for consumption beyond the farm than anywhere else, it was not export which regulated production. Arthur Young was the first who made the English agriculturists understand the increasing importance of a market ; that is to say, the sale of agricultural produce to a population not contributing to produce it. This non-agricultural population, which up to that time was inconsiderable, began to develop ; and since then its increase has been immense, owing to the expansion of manufactures and com- merce. Everybody knows what enormous progress the employ- ment of steam as a motive power has effected in British manufac- tures and commerce during the last fifty years. The principal seat of this amazing activity is in the northwest of England, the county of Lancaster, and its neighbor, the West Riding of York- shire. There Manchester works cotton, Leeds wool, Sheffield iron, and the port of Liverpool, with its constant current of exports and imports, feeds an indefatigable production." " One third of the English nation is concentrated on these two points, — London in the south, and the manufacturing towns of Lancashire and the West Riding in the north. These human ant-hills are as rich as they are numerous. What becomes of the immense amount of wages paid to this mass of workmen every year? It goes, in the first place, to pay for meat, beer, milk, butter, cheese, which are directly supplied by agriculture, and woollen and linen clothing, which it indirectly furnishes. There exists, consequently, a constant demand for productions, which THE THEORY OF KENT. 167 agriculture can hardly satisfy, and which is for her, in some measure, an unlimited source of profit. The power of these out- lets is felt over the whole country ; if the farmer has not a man- ufacturing town beside him to take off his produce, he has a port ; and should he be distant from both, he brings himself into con- nection with them by canal, or by one or more lines of railway." Such is the influence, upon production, of an inexhaustible outlet, that these fields are rented at an average of 30 s. ($ 7), and in the immediate environs of Liverpool and Manchester, arable land lets as high as £ 4 ($ 20) an acre. There are not many soils in the most sun-favored lands which can boast such rents. " It is pretty generally believed that pauperism prevails more* in the manufacturing than in other districts. This is quite a mis- take." It appears from the official returns, that in the manufac- turing counties "the poor's rate is about 1 s. in the pound, or 3 s. to 4 s. a head, and the number of poor 3 to 4 per cent of the pop- ulation ; whilst in the agricultural counties it exceeds 2 s. in the pound, or 1 s. a head, and the number of paupers is from 1 3 to 1 6 per cent of the population. The cause of this difference is easily understood ; — the number of paupers and the cost of their main- tenance increases as the rate of wages becomes lower. Although the working population be three or four times more dense in the manufacturing than in other parts of the country, its condition there is better, because it produces more." "If we transport ourselves to France, to the most backward departments of the centre and south, what do we there find ] A thinly scattered population, — at the most, not exceeding on an average one third that of the English, — one head only, in place of three, to five acres, — and that population almost entirely agri- cultural ; few or no large towns, little or no manufactures, trade confined to the limited wants of the inhabitants ; the centres of consumption distant, means of communication costly and difficult, and expenses of transport equal to the entire value of the pr6duce. The cultivator has little or nothing to dispose of. Why does he work 1 To feed himself and his master with the produce of his labor. The master divides the produce with him, and consumes his portion ; if it is wheat and wine, master and metayer eat wheat and drink wine ; if it is rye, buckwheat, potatoes, these they con- sume together. Wool and flax are shared in like manner, and 168 THE THEORY OF KENT. serve to make the coarse stuffs with which both clothe themselves. Should there happen to remain over a few lean sheep, some ill-fed pigs, or some calves, reared with difficulty by over-worked cows, whose milk is disputed with their offspring, these are sold to pay taxes. " In this state of things, as there is. no interchange, the culti- vator is obliged to produce those articles which are most necessary for life, — that is to say, the cereal grains : if the soil yields little, so much the worse for him ; he has no choice, he must produce corn or die of hunger. Now, on bad land, there is no more ex- pensive cultivation than this ; even on good, if care is not taken, it soon becomes burdensome ; but under these conditions of farm- ing, no one thinks of taking account of the expense. The labor is not for profit, but for life ; cost what it may, corn must be had, or at all events, rye. As long as the population is scanty, the evil is not overwhelming, because there is no want of land : long fallows enable the land to produce something ; but as soou as the popula- tion begins to increase, the soil ceases to be sufficient for the purpose ; and a time soon arrives when the population suffers severe! y for want of food." That Rent depends upon the distribution, and not upon the increase, of the population, may be easily seen by putting the ex- treme case. Suppose the inhabitants of a country distributed with perfect evenness over its territory, each family residing upon the centre of the spot, say ten or twelve acres in extent, which feeds it. While the population is small, a district of limited ex- tent may supply homesteads for all the inhabitants. As the people increase in number, suppose additional lots, upon the out- skirts of the former settlements, to be laid out for the new fami- lies. It is not necessary that the soil should be of equal fertility throughout the land, so that all the farms should consist of the same number of acres. In the more productive districts, six or eight acres may suffice for a family ; in the less favored ones, six- teen or twenty may be needed. The only essential point is, that each family should have enough land, and no more than enough, for its own wants. Under these circumstances, it is evident, the land would not yield any Rent ; — there would be enough for all. Monopoly, or exclusive appropriation, being impossible, a Price would no more THE THEOKY OF KENT. 169 be set upon the land, than upon the air or the light. No one would think of charging Eent, any more than of levying tolls for the right to cross the broad ocean. And it is conceivable, that this state of things should exist over the whole earth, and should con- tinue for many centuries to come. Islands of limited extent, like the British Isles, might indeed be filled up, or completely occupied, the people having become so numerous that no more land could be had for the new families. In such case, the new families would have to emigrate, as they are now actually obliged to do ; but they would find abundance of unoccupied land in America, Australia, and elsewhere. But if the population of one country, or of the whole globe, were thus distributed with perfect evenness, each family residing upon the spot that furnished it with food, though there would be no Rent, it is obvious that there wo aid be little or no Division of Labor, and, consequently, no progress in civilization and the arts, and no advancement in opulence- Mankind would begin to retro- grade to a condition as low as that in which any portion of them have yet been found. The labor of far the larger portion of each family would have to be devoted to agriculture, in order to obtain the necessary sustenance from the ground ; and as the labor of the remaining part would not suffice to renew and keep in repair the stock of tools, domestic utensils, and household comforts, these would soon be expended or worn out. As tools become imperfect and deficient, more labor must be given to tillage. The processes of agriculture would thus rapidly degenerate^ till, at last, the in- cessant toil of the whole family would produce only a scanty supply of the coarsest sustenance, and, from the want of leisure, knowledge and civilization would die out. But experience even of the commencement of these evils would teach mankind their appropriate and easy remedy. Several fami- lies would unite, in order to obtain the benefits of a Division of Labor. Some would devote themselves exclusively to the manufac- ture of agricultural implements and household articles, while the labor of the others would supply them with food. As manufactur- ing operatives must work near each other, the ground originally allotted to a single family would come to be tenanted by many, and would form the nucleus of a town. But a town is necessarily a market for the sale of agricultural produce and the purchase of 170 THE THEORY OF RENT. manufactured commodities. From the advantages which the town would thus afford, the land in its immediate vicinity, being limited in quantity, would assume a value, or, in other words, would begin to yield a Rent. Only a small number of farms of the original size, from six to twenty acres, can have the advantage of immedi- ate proximity to the newly formed manufacturing village ; the occupants of these farms would be better furnished with tools, and more able to exchange their products for manufactured goods. The occupants of farms at a distance would be willing to purchase these advantages of them, — to offer two or three acres remote from market in exchange for one acre adjoining a town. Thus Rent would begin, not at all as a consequence of the absolute in- crease of the population, for the total population might be station- ary or even retrograding while these changes were going on, but as a consequence of the altered distribution of the people over the face of the country. The highest Rents of all are obtained from land that is not used for any purposes of agriculture, but only for habitation or manufacturing purposes, within the limits of the cities themselves, — a phenomenon of which the theory of Ricardo furnishes no ex- planation whatever. His theory is applicable only to what may be called agricultural Rents ; civic Rents, the ground-rents of houses and shops iu crowded cities, afford the best of all instances of Rent property so called, as they are free from the effects of the great disturbing cause, — agricultural improvements. These ground-rents do not depend upon the magnitude of the population of the city, or upon its rate of increase ; they rise and fall in dif- ferent streets, under the varying demand produced by the changes of business and the mutations of fashion. In London, they have risen enormously high in Belgravia, and fallen proportionally in what was the fashionable part of the metropolis a century ago; in the most crowded portions of the city proper, they are probably no higher than they were in the time of George III., and do not nrtainly equal some in "Washington Street, Boston, the population which city is not one twelfth part as great as that of London. •A the English metropolis, the population, as it increases in num- ber, necessarily spreads itself over more space ; and therefore it may be doubted whether the aggregate ground-rent of those por- tions of the city which were densely inhabited at the beginning of THE THEORY OF RENT. 171 this centm-y is any greater now than it was in 1800, though the population of all England meanwhile has doubled. In the United States, the want of local attachments and the restless and migratory character of the population have drawn attention to the fact, *hat Eents begin, or the land acquires value, as fast as the vicinity is peopled. The favorite form of specula- tion here, the easiest and most common mode of money-getting, is the acquisition of a tract of land in some neighborhood where the circumstances indicate that a new town or city must soon spring up. A fortune is thus easily acquired, as the land acquires value before any labor is expended upon it, and long before the necessi- ties of an increasing population would require it to be inhabited, or even cultivated. In England, the more stationary habits of the population have concealed this fact; and as the land slowly rose in value with the advancement of opulence and the gradual increase in the number of the whole people, Kicardo's theory of Rent seemed plausible enough. Yet even in England there has been a regular movement of the population, a steady drain from the agricultural counties, and a filling up of the manufacturing districts. The rise of Rents, as thus explained, is no hardship for those who are not landholders, and does not tend to depress the laboring part of the population. Those who pay these higher Rents, or the higher prices of corn which produce them, are compensated by the advantages they obtain through their vicinity to a market. In fact, the enhancement of price for the burghers or citizens is merely nominal ; they obtain more, and have a readier sale, for the manufactured goods which they produce, and pay more for the corn which they consume, the one result counterbalancing the other. What matters it to the laborer if he pays more Rent for his dwelling, and a higher price for his corn and potatoes, provided that the additional wages which he receives are more than enough to meet these additional expenses 1 The positive gain to the com- munity consists in the saving of transportation both ways. If the population were not concentrated, it would be necessary to trans- port the agricultural produce a long distance to the town where it is consumed, and to carry the manufactured goods an equal dis- tance to the farmers who need them. Even the English Econo- mists admit that a great saving is effected in this respect through 172 THE THEORY OF KENT. canals, railways, and other contrivances which lessen the cost of transportation. Is it not still a greater saving to do away with the necessity of these improved means of transport, and with the cost of constructing them, by bringing the agriculturists and the manufacturers nearer to each other 1 It is as much for the interest, then, of the farmers of the Mississippi Valley, as of the manufacturers themselves, that the American system of protection should be continued. At present, the value of the lands at the "West is kept down by the distance of their produce from a market. The cost of transporting a barrel of flour from Cincinnati to New York amounts, at ordinary prices, to at least thirty per cent of its value at the former place ; the cost of its further transportation to Liverpool, including insurance and other necessary expenses, raises this proportion to about forty per cent. Create a manufacturing population in Ohio like that which exists in English Lancashire, and the price of flour at Cincinnati would be made equal to its price at Liverpool. Free trade between England and Ohio, then, means simply that Ohio produce should be admitted into the English ports under what we may call a "transportation duty" of forty per cent; while, owing to the great value in a small bulk, of the finer manufactures, English produce is to be admitted into Cincinnati at a duty of only fifteen per cent. In other words, the opponents of protection would persuade the Ohio farmer that it is better for him to buy English broad- cloth at $ 1.70 a yard, and sell his flour at $ 5.00, than to buy American broadcloth of the same quality at $ 2.00, and sell his flour at $ 7.00. The depression in the value of Ohio produce, which took place between 1847 and 1852, is clearly attributable to the fact, that the crowds of laborers discharged from our un- prosperous manufacturing establishments, and the 300,000 immi- grants annually landed on our shores, had been driven into agriculture, and had so increased the annual product of Michigan, Iowa, and Wisconsin, as to undersell the Ohio farmer at his own door. The protection of our manufactures would enlarge the home market for him, through the very means which are now swelling the number of his competitors. WAGES. 173 CHAPTEK X. THE CAUSES WHICH AFFECT THE RATE OF WAGES: WHY WAGES ARE NOT EQUAL IN DIFFERENT EMPLOYMENTS. The doctrine of the English Economists respecting Wages may be easily inferrred from their two theories, already considered, respecting Population and Rent. Putting aside the consideration of Wages reckoned in money, as these are subject to merely nomi- nal variations, according as the value of money rises or falls, they say that Wages rated in commodities, or the quantity of produce apportioned to each laborer, is determined by the ratio which the capital of the country bears to its laboring population, or to the number of those* who work for hire. By capital, however, they here mean "only Circulating capital, and not even the whole of that, but only the part of it which is expended directly in the purchase of labor. To this, however, must be added all funds which, without forming a part of capital, are paid in exchange for labor; such as the wages of soldiers, domestic servants, and all other unproductive laborers." The aggregate of capital or wealth devoted to this purpose, to the payment of productive or unpro- ductive labor, may be termed the Wages-fund of a country; and the share of it which each laborer receives will evidently be deter- mined by its amount, divided by the whole number of persons seeking employment. Thus explained, the doctrine is a mere truism. We obtain no insight into the causes which regulate the rate of Wages, when we are merely told that this rate depends upon the whole sum annu- ally expended for Wages, divided by the number of persons who share this sum among them. But as it is intended to be under- stood, the doctrine is merely a covert statement of the